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Taxation
Finance Act 2022
Twenty-eighth edition
Alan Melville
FCA, BSc, Cert. Ed.
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PEARSON EDUCATION LIMITED
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First published 1995 (print)

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Contents
Preface ix Eligible interest payments 55

Acknowledgements x Annual payments 56
Summary of tax data xi Gifts of shares or property to charity 56
Payments which are tax reducers 57
Part 1 Income Tax and National Insurance Maintenance payments 57
Loans used to purchase a life annuity 58
1 Introduction to the UK tax system 3 Gifts of pre-eminent property to
UK taxes 3 the nation 58
Sources of tax law 4 Gift Aid 59
The tax year 6 5 Income from property 63
Structure of HM Revenue and Customs 6 Definition of property income 63
Administration of the tax system 7 Basis of assessment and allowable
Self Assessment 7 expenditure 64
Appeals 11 Capital expenditure 65
Tax evasion and tax avoidance 12 Losses 67
Making Tax Digital for income tax 14 Lease premiums 68
The HMRC Charter 15 "Rent-a-room" relief 70
2 Introduction to income tax 17 Furnished holiday lettings (FHL) 70
Taxable persons 17 6 Income from savings and investments 75
Classification of income 18 Interest received 75
Exempt income 19 Dividends received 77
Structure of an income tax computation 20 Tax-efficient investments 77
Married couples and civil partners 21 Individual Savings Accounts 78
Rates of income tax for 2022-23 21 Enterprise Investment Scheme 80
Income taxed at source 24 Venture Capital Trusts 81
Savings income 25 Child Trust Funds 82
Dividend income 32 Income from trusts and settlements 83
Allocation of the personal allowance 35 Miscellaneous income 86
3 Personal allowances 39 7 Income from employment (1) 89
Personal allowances for 2022-23 39 Employment and self-employment 89
The personal allowance (PA) 40 Basis of assessment 92
Blind person's allowance (BPA) 43 Employment income 92
Tax reducers 43 Non-taxable employment income 93
Married couple's allowance (MCA) 43 Deductible expenses 95
4 Payments and gifts eligible Termination payments 98
for tax relief 50 The PAYE system 100
Payments and gifts deductible from Construction industry scheme 104
total income 50 Employee incentive schemes 105
v
Contents
8 Income from employment (2) 110 Temporary extension of s64 relief 189
Benefits in kind 110 Early trade losses relief 190
Living accommodation 112 Terminal trade loss relief 192
Cars provided for private use 115 Post-cessation trade relief 194
Beneficial loans 119 Transfer of a business to a company 194
Salary sacrifice 121 Losses on shares in unlisted trading
companies 194
9 Income from self-employment:
Limit on income tax reliefs 195
Computation of income 123
The badges of trade 123 13 Income from self-employment:
The calculation of trading profits 125 Partnerships 198
Deductibility of expenditure 126 Principles of partnership taxation 198
Disallowed expenditure 126 Notional profits and losses 201
Allowable expenditure 129 Change in partnership composition 202
Adjustments relating to income 131 Non-trading income 204
Trading income allowance 132 Trading losses 205
Cash basis and simplified expenses 133 14 Pension contributions 210
10 Income from self-employment: Registered pension schemes 210
Basis periods 139 Tax relief for contributions
The current year basis 139 by scheme members 212
Commencement of trade 140 Tax relief for contributions
Cessation of trade 143 by employers 215
Change of accounting date 145 Annual allowance charge 217
Averaging of trading profits for Lifetime allowance charge 220
farmers and creative artists 150 15 Payment of income tax, interest
Basis period reform 153 and penalties 225
11 Income from self-employment: Payment of income tax 225
Capital allowances 160 Late payment penalties 228
Eligible expenditure 160 Interest on overdue income tax 229
Chargeable periods 160 Interest on overpaid income tax 230
Plant and machinery 161 Penalties 231
Capital allowances on plant and Reformed late filing and late
machinery 163 payment penalties 233
Writing down allowance (WDA) 164 16 National Insurance contributions 236
Annual investment allowance (AIA) 167 Class 1 236
First year allowance (FYA) 170 Class 1A and Class 1B 242
Balancing allowances and charges 172 Class 2 and Class 3 243
Non-pooled assets 172 Class 4 244
Allowances on cessation of trade 176 Annual maximum contributions 245
Structures and buildings allowances 177
Miscellaneous capital allowances 178 Review questions (Set A) 249
12 Income from self-employment: Part 2 Capital Gains Tax

Trading losses 183
Relief for trading losses 183 17 Introduction to capital gains tax 259
Carry-forward trade loss relief 184 Chargeable persons 259
Trade loss relief against total income 186 Chargeable assets 260
vi
Contents
Chargeable disposals 261 Part 3 Corporation Tax

Basis of assessment 262
Rates of CGT 263 23 Introduction to corporation tax 347
Relief for capital losses 265 Scope of corporation tax 347
Relief for trading losses 267 Accounting periods 348
Administration of CGT 269 Taxable total profits 349
18 Computation of gains and losses 273 Trading income 350
Layout of a CGT computation 273 Income from property 355
Disposal value 274 Income from non-trading loan
Allowable expenditure 274 relationships 355
Part disposals 276 Dividends received 357
Assets with negligible value 278 Relief for charitable donations 357
Assets held on 31 March 1982 279 Loan relationships 358
Long periods of account 362
19 Chattels and wasting assets 282 Research and development tax relief 364
The chattels exemption 282 Intangible fixed assets 365
Chattels disposed of at a loss 284
Part disposals of chattels 284 24 Corporate chargeable gains 369
Wasting chattels 287 Chargeable disposals and
Wasting assets 288 chargeable assets 369
Leases 289 Basis of assessment 370
Computation of gains and losses 370
20 Shares and securities 298 Indexation allowance 371
The share matching rules 298 Assets held on 31 March 1982 374
The Section 104 holding 300 Disposals of shares or securities 375
Bonus issues 302
Rights issues 304 25 Computation and payment of
Capital distributions 306 the corporation tax liability 386
Takeovers 308 Corporation tax financial years 386
Gilts and qualifying corporate bonds 310 Rates of corporation tax 387
Due date of payment 388
21 Principal private residence 314
Interest on underpaid and overpaid
Principal private residence 314 corporation tax 391
Partial exemption 315 Self Assessment 393
Deemed residence 316 Penalties 394
Letting relief 318 Rates of corporation tax as from
Business use 320 FY2023 395
22 CGT reliefs 323 26 Corporation tax losses 401
Damaged assets 323
Relief for trading losses 401
Destroyed assets 326
Carry forward of trade loss relief 402
Replacement of business assets 327 Unrelieved qualifying charitable
Gift of business assets 330
donations 404
Transfer of a business to a company 332 Trade loss relief against total profits 405
Business asset disposal relief 333 Temporary extension of trade loss
Reinvestment into EIS shares 336 relief against total profits 406
Loans to traders 337
Repayments of corporation tax 409
Review questions (Set B) 340 Anti-avoidance legislation 410
vii
Contents
Choice of loss relief 411 The tax point 474

Non-trading losses 411 Tax invoices 474
Restriction on deduction of Accounting records 475
carried-forward losses 412 Special schemes 476
Retail schemes 479
27 Close companies and investment
Bad debts 480
companies 415
Non-deductible input tax 481
Close companies 415
Partial exemption 483
Definition of a close company 415
Administration of VAT 485
Exceptions 418
Penalties, surcharges and interest 487
Consequences of close company status 419
Companies with investment business 422 31 Inheritance tax 492
Choice of business medium 423 Transfers of value 492
Incorporation 427 Exempt transfers 494
Potentially exempt transfers (PETs) 496
28 Groups of companies and
IHT payable on chargeable lifetime
reconstructions 430
transfers 498
Related 51% group companies 430
IHT payable on death 500
Group payment arrangements 433
Valuation 506
Transfer pricing 433
Business property relief 508
75% groups 434
Agricultural property relief 509
Group relief 435
Administration of IHT 509
Transfer of chargeable assets within
a group 438 32 Overseas aspects of taxation 513
Capital losses 440 Residence and domicile 513
Consortia 441 Income tax - general rules 516
Corporate interest restriction 443 Double taxation relief (DTR) 517
Company reconstructions 443 Income from employment 518
Trading income 520
Review questions (Set C) 446
Income from property and investments 521
Capital gains tax - general rules 521
Part 4 Miscellaneous Inheritance tax - general rules 522
Corporation tax - general rules 523
29 Value added tax (1) 455 Controlled foreign companies (CFCs) 525
The principle of VAT 455 Transfer pricing 526
Taxable persons 456 Double taxation relief for companies 526
Taxable supplies 456 Diverted profits tax 529
Exempt supplies 458 Digital services tax 530
Reduced rate supplies 459
Zero rate supplies 459 Review questions (Set D) 533
The value of a supply 460
Imports and exports 462 Part 5 Answers
Registration 465
Deregistration 470 Answers to exercises 541
Answers to review questions 593
30 Value added tax (2) 473
Accounting for VAT 473 Index 605
viii
Preface
The main aim of this textbook is to describe the UK taxation system in sufficient depth and
with sufficient clarity to meet the needs of those undertaking a first course of study in
taxation. The book has not been written with any specific syllabus in mind but should be
useful to anyone who is studying taxation as part of a university or college course in
accounting, finance or business studies. The book should also be of value to students who
are preparing for the taxation examinations of the professional accounting bodies. A list of
relevant examinations is given on the back cover of the book.
Every effort has been made to explain the tax system as clearly as possible. There are
numerous worked examples and each chapter (except Chapter 1) concludes with a set of
exercises which thoroughly test the reader's grasp of the new topics introduced in that
chapter. The book also contains four sets of review questions, drawn mainly from the past
examination papers of the professional accounting bodies. The solutions to most of these
exercises and questions are located at the back of the book but solutions to those exercises
and questions marked with an asterisk (*) are provided in a separate Instructor's Manual.
This twenty-eighth edition is up-to-date in accordance with the provisions of Finance Act
2022, which is based upon the October 2021 Budget proposals. The book also takes into
account the Spring Statement which took place in March 2022.
Alan Melville
May 2022
ix
Acknowledgements
I would like to thank the following accounting bodies for granting me permission to use
their past examination questions:
4 Association of Chartered Certified Accountants (ACCA)
4 Chartered Institute of Public Finance and Accountancy (CIPFA)
4 Association of Accounting Technicians (AAT).
I must emphasise that the answers provided to these questions are entirely my own and are
not the responsibility of the accounting body concerned. I should also point out that the
questions which are printed in this textbook have been amended (in some cases) so as to
reflect changes in taxation law which have occurred since those questions were originally
published by the accounting body concerned.
I would also like to thank the Office for National Statistics for granting me permission to
reproduce the table of Retail Price Indices given in Chapter 24.
Please note that, unless material is specifically cited with a source, any company names
used within this text have been created by me and are intended to be fictitious.
Alan Melville
May 2022
x
Summary of Tax Data
Income Tax
2022-23 2021-22
TAX RATES AND BANDS†
Basic rate 20% 20%
Higher rate 40% 40%
Additional rate 45% 45%
Basic rate limit‡ £37,700 £37,700
Higher rate limit £150,000 £150,000
† Different tax rates and bands apply to the non-savings income of Scottish taxpayers (see below)
‡ Basic rate limit frozen at £37,700 until the end of tax year 2025-26
Starting rate for savings 0% 0%

Starting rate limit for savings £5,000 £5,000
Personal savings allowance (basic rate taxpayer) £1,000 £1,000
Personal savings allowance (higher rate taxpayer) £500 £500
Dividend ordinary rate 8.75% 7.5%
Dividend upper rate 33.75% 32.5%
Dividend additional rate 39.35% 38.1%
Dividend allowance £2,000 £2,000
SCOTTISH TAX RATES AND BANDS†

Starter rate 19% 19%
Basic rate 20% 20%
Intermediate rate 21% 21%
Higher rate 41% 41%
Top rate 46% 46%
Starter rate limit £2,162 £2,097
Basic rate limit £13,118 £12,726
Intermediate rate limit £31,092 £31,092
Higher rate limit £150,000 £150,000
† These tax rates and bands apply only to the non-savings income of Scottish taxpayers
xi
Summary of Tax Data
PERSONAL ALLOWANCES
2022-23 2021-22
Personal allowance† £12,570 £12,570
Marriage allowance £1,260 £1,260
Blind person's allowance £2,600 £2,520
Married couple's allowance:
Born before 6 April 1935 £9,415 £9,125
Minimum amount £3,640 £3,530
Income limit for basic personal allowance £100,000 £100,000
Income limit for married couple's allowance £31,400 £30,400
† Personal allowance frozen at £12,570 until the end of tax year 2025-26
CAR AND FUEL BENEFIT

Zero emissions 2% 1%
*1-50 g/km (depending upon electric range) 2%-14% 2%-14%
*51g/km to 54g/km 15% 15%
*55g/km to 59g/km 16% 16%
*60g/km to 64g/km 17% 17%
*65g/km to 69g/km 18% 18%
*70g/km to 74g/km 19% 19%
*75g/km 20% 20%
Each additional 5g/km +1% +1%
Maximum charge 37% 37%
Amount used in car fuel benefit calculation £25,300 £24,600
* These percentages were 1% lower in 2021-22 if the car was registered on or after 6 April 2020
CAPITAL ALLOWANCES
Writing Down Allowance (WDA)
Main pool of plant and machinery 18% 18%
Special rate pool of plant and machinery 6% 6%
Annual Investment Allowance (AIA) 100% 100%
AIA annual limit from 1 January 2016† £200,000 £200,000
First Year Allowances (FYAs) 100% 100%
Structures and Buildings Allowances (SBAs) 3% 3%
† AIA annual limit temporarily raised to £1m between 1 January 2019 and 31 March 2023
PENSION SCHEMES
Annual allowance £40,000 £40,000
Lifetime allowance† £1,073,100 £1,073,100
† Lifetime allowance frozen at £1,073,100 until the end of tax year 2025-26
xii
Summary of Tax Data
National Insurance Contributions

2022-23 2021-22
CLASS 1
Lower earnings limit (weekly) £123 £120
Primary threshold (weekly) (£190 until 6 July 2022) £242 £184
Upper earnings limit (weekly) £967 £967
Secondary threshold (weekly) £175 £170
Upper secondary threshold (weekly) £967 £967
Employee contributions
Rate on earnings between primary threshold and UEL 13.25% 12%
Rate on earnings beyond UEL 3.25% 2%
Employer contributions
Rate on earnings beyond secondary threshold 15.05% 13.8%
Employment allowance £5,000 £4,000
CLASS 1A
Rate 15.05% 13.8%
CLASS 2
Weekly contribution £3.15 £3.05
Small profits threshold £6,725 £6,515
CLASS 3
Weekly contribution £15.85 £15.40
CLASS 4
Lower profits limit £11,908 £9,568
Upper profits limit £50,270 £50,270
Rate on profits between lower and upper limit 10.25% 9%
Rate on profits beyond upper limit 3.25% 2%
Capital Gains Tax

2022-23 2021-22
Standard rate† 10% 10%
Higher rate† 20% 20%
Business asset disposal relief rate 10% 10%
Business asset disposal relief lifetime limit £1,000,000 £1,000,000
Annual exempt amount‡ £12,300 £12,300
† Taxable gains on the disposal of residential property are taxed at 18% and 28%
‡ Annual exempt amount frozen at £12,300 until the end of tax year 2025-26
xiii
Summary of Tax Data
Corporation Tax
Financial Year FY2022 FY2021 FY2020 FY2019 FY2018
Main rate† 19% 19% 19% 19% 19%
Patent box (effective rate) 10% 10% 10% 10% 10%
R&D SMEs payable credit 14.5% 14.5% 14.5% 14.5% 14.5%
R&D expenditure credit 13% 13% 13% 12% 12%
† The main rate for FY2023 will be 25%. However, a "small profits rate" of 19% will apply to
companies with profits not exceeding £50,000. Companies with profits between £50,000 and
£250,000 will be subject to the main rate, but reduced by a marginal relief.
Inheritance Tax
Date of transfer Nil rate Rate on life- Rate Lower
band †‡ time transfers on death rate
6 April 2006 to 5 April 2007 0 - £285,000 20% 40% -
6 April 2007 to 5 April 2008 0 - £300,000 20% 40% -
6 April 2008 to 5 April 2009 0 - £312,000 20% 40% -
6 April 2009 to 5 April 2012 0 - £325,000 20% 40% -
6 April 2012 to 5 April 2023 0 - £325,000 20% 40% 36%
† Residence nil rate band for 2022-23 is £175,000
‡ Nil rate band and residence nil rate band both frozen until the end of tax year 2025-26
Value Added Tax

Standard rate 20% (from 4 January 2011)
Reduced rate 5%
Registration threshold† £85,000 (from 1 April 2017)
Deregistration threshold† £83,000 (from 1 April 2017)
† Thresholds frozen until April 2024
xiv
Part 1
INCOME TAX AND

NATIONAL INSURANCE
Chapter 1
!"#$%&'(#)%"*#%*#+,*-.*#/0*
121#,3*
Introduction
The purpose of this first chapter is to provide an overview of the UK tax system. The
principal UK taxes are introduced and classified and the main sources of taxation law are
explained. This chapter also deals with:
(a) the structure and functions of Her Majesty's Revenue and Customs (HMRC) which is
the organisation responsible for the administration of the UK tax system
(b) the annual procedure which is used to determine the tax liability of an individual.
The chapter concludes by distinguishing between tax avoidance and tax evasion.
UK taxes
The UK taxation system is composed of a number of different taxes, some of which are
direct taxes and some of which are indirect taxes:
(a) Direct taxes are charged on income, profits or other gains and are either deducted at
source or paid directly to the tax authorities. The main direct taxes which are payable
by individuals are income tax, capital gains tax and inheritance tax. The main direct tax
payable by companies is corporation tax. All of these direct taxes are administered by
HM Revenue and Customs (HMRC), which was formed in April 2005 when the Inland
Revenue and HM Customs and Excise were merged together.
National Insurance contributions, which can also be regarded as a form of direct
taxation, are administered by the NICs and Employer Office of HMRC.
(b) Indirect taxes are taxes on spending. They are charged when a taxpayer buys an item
and are paid to the vendor as part of the purchase price of that item. It is then the
vendor's duty to pass the tax on to the tax authorities. The indirect taxes include value
added tax (VAT), stamp duty, customs duties and the excise duties levied on alcohol,
tobacco and petrol. The only indirect tax considered in this book is VAT, which is also
administered by HM Revenue and Customs.
3
PART 1: Income Tax and National Insurance
Sources of tax law
There is no single source of UK taxation law. The basic rules are laid down in Acts of
Parliament but it is left to the courts to interpret these Acts and to provide much of the detail
of the tax system. In addition, HMRC issues a variety of statements which explain how the
law is implemented in practice. These statements explain the tax authorities' interpretation
of the law and will be adhered to unless successfully challenged in the courts.
Statute law
The basic rules of the UK tax system are embodied in a number of tax statutes or Acts of
Parliament. The main statutes currently in force for each tax are as follows:
Tax Statute Abbreviation
Income tax Capital Allowances Act 2001 CAA 2001
Income Tax (Earnings and Pensions) Act 2003 ITEPA 2003
Income Tax (Trading and Other Income) Act 2005 ITTOIA 2005
Income Tax Act 2007 ITA 2007
National Insurance Social Security Contributions and Benefits Act 1992 SSCBA 1992
Capital gains tax Taxation of Chargeable Gains Act 1992 TCGA 1992
Inheritance tax Inheritance Tax Act 1984 IHTA 1984
Corporation tax Taxation of Chargeable Gains Act 1992 TCGA 1992
Capital Allowances Act 2001 CAA 2001
Corporation Tax Act 2009 CTA 2009
Corporation Tax Act 2010 CTA 2010
Overseas aspects of tax Taxation (International and Other Provisions) Act 2010 TIOPA 2010
Value added tax Value Added Tax Act 1994 VATA 1994
Administration of } Taxes Management Act 1970 TMA 1970
the tax system } Customs and Excise Management Act 1979 CEMA 1979
These statutes are amended each year by the annual Finance Act, which is based upon the
Budget proposals put forward by the Chancellor of the Exchequer. Some of the tax statutes
provide for the making of detailed regulations by statutory instrument. A statutory
instrument (SI) is a document which is laid before Parliament and (in most cases) auto-
matically becomes law within a stated period unless any objections are raised to it.
European Union law

Until 1 February 2020, the UK was a member of the European Union (EU) and was required
to comply with EU law. Member states of the EU do not adopt a common tax system but
must implement EU Directives, some of which are concerned with taxation (principally
VAT). As from 1 February 2020, the UK entered a transition period during which EU law
continued to apply. But this period came to an end on 31 December 2020 and EU law ceased
to have effect in the UK as from 1 January 2021.
4
CHAPTER 1: Introduction to the UK Tax System
Although the UK has now left the EU, some aspects of the UK tax system were originally
devised so as to comply with EU Directives and these will continue unless amended or
repealed by subsequent legislation. Much of the UK VAT law falls into this category.
Furthermore, when the UK was a member of the EU, it was necessary to seek EU "State
aid" approval for UK tax-advantaged schemes such as the Enterprise Investment Scheme
(see Chapter 6) or the R&D tax credits scheme (see Chapter 23). These schemes had to be
designed within the constraints of EU law, but the UK is now at liberty to amend such
schemes or to introduce new ones as it sees fit.
Case law
Over the years, taxpayers and the tax authorities have frequently disagreed over the
interpretation of the tax Acts. As a result, many thousands of tax cases have been brought
before the courts. The decisions made by judges in these cases form an important part of the
tax law of the UK and some of the more significant cases are referred to in this book.
Statements made by the tax authorities

The main statements and other documents produced by HM Revenue and Customs as a
guide to the law on taxation are as follows:
(a) Statements of Practice. An HMRC Statement of Practice (SP) sets out the HMRC
interpretation of tax legislation and clarifies the way in which the law will be applied
in practice. For example, SP 4/97 (the fourth SP issued in 1997) deals with the taxation
treatment of commissions, cashbacks and discounts.
(b) Extra-Statutory Concessions. An Extra-Statutory Concession (ESC) consists of a
relaxation which gives taxpayers a reduction in liability to which they are not entitled
under the strict letter of the law. In general, concessions are made so as to resolve
anomalies or to relieve hardship. For example, ESC A91 deals with the taxation treat-
ment of living accommodation provided by reason of employment.
A process of giving statutory effect to certain ESCs is currently underway. This is
generally being done by means of statutory instruments.
(c) Announcements. Announcements are issued by HMRC throughout the year on a wide
variety of tax-related subjects. Of especial interest are the documents issued on Budget
day, which provide a detailed explanation of the Budget proposals.
(d) Internal Guidance Manuals. HMRC produces a comprehensive set of internal tax
manuals for the guidance of its own officers. These manuals may be accessed on the
HMRC website (see below).
(e) Explanatory publications. Leaflets, factsheets and booklets are aimed at the general
public and explain the tax system in non-technical language. These can usually be
accessed online, though some are still available in printed form.
Most of the above information is now available on the HMRC website, the address of which
is www.gov.uk/government/organisations/hm-revenue-customs.
5
The tax year
The changes to the tax system that are proposed in the annual Budget speech are usually
intended to take effect as from the start of the next tax year. Tax years for individuals and
for companies are identified as follows:
(a) For individuals, a tax year runs from 6 April to the following 5 April. For instance, tax
year 2021-22 began on 6 April 2021 and ended on 5 April 2022. Tax years are also
referred to as fiscal years or years of assessment.
(b) For companies, a corporation tax financial year runs from 1 April to the following 31
March and is identified by the year in which it begins. For instance, the financial year
referred to as FY2021 began on 1 April 2021 and ended on 31 March 2022.
This book takes into account the provisions of Finance Act 2022‡ (which is based upon the
October 2021 Budget†) and describes the UK taxation system for fiscal year 2022-23 and
corporation tax financial year FY2022.
† The annual Budget (which used to take place in March each year) now takes place in the preceding
October. This gives individuals and businesses more time to digest the tax changes before they take
effect at the start of the next tax year. However, there is also a Spring Statement in March. This is
largely concerned with public spending plans but may introduce further tax changes.
‡ Finance Act 2022 (which implements the October 2021 Budget proposals) received Royal Assent
on 24 February 2022. Further tax changes were introduced by the Spring Statement on 23 March
2022 and these are also explained in this book.
Structure of HM Revenue and Customs
Her Majesty's Revenue and Customs (HMRC) consists of a large body of civil servants
which is headed by the Commissioners for Revenue and Customs. The Commissioners are
appointed by Her Majesty The Queen in accordance with recommendations made by the
Treasury. This Government department has overall responsibility for the public finances of
the UK and is directed by the Chancellor of the Exchequer. The principal functions of the
Commissioners for Revenue and Customs are as follows:
(a) to implement the law relating to direct and indirect taxation
(b) to provide advice to the Chancellor of the Exchequer on taxation matters
(c) to administer the divisions and offices into which HMRC is organised.
The routine work of HMRC is carried out by officials known as Officers of Revenue and
Customs. With regard to direct taxation, the main function of these officials is generally to
check a taxpayer's own self-assessment of the tax liability (see below) and then to ensure
that the correct amount of tax is paid. The functions of HMRC with regard to indirect
taxation (and VAT in particular) are explained later in this book (see Chapter 30).
6
HMRC has specialist offices which deal with such matters as pension schemes, charities and
so forth but most of the day-to-day work relating to direct taxation takes place in local area
offices. These offices are responsible for routine assessment and collection of tax and for
ensuring that taxpayers comply with tax regulations. Until recently, HMRC had 170 local
offices but these are being consolidated into 13 regional centres.
Support for taxpayers who need help with their tax affairs is provided by means of
specialist expert advice either given over the telephone (or online) or delivered by mobile
advisors at convenient locations in the community.
Administration of the tax system
The remainder of this chapter describes the administration system which is used to assess
an individual's liability to income tax and capital gains tax in each tax year. This system is
referred to as "Self Assessment". Under this system, the taxpayer (not HMRC) is primarily
responsible for ensuring that:
(a) the tax liability for each tax year is properly assessed, and
(b) the correct amount of tax is paid on the due date or dates.
Subsequent chapters of this book explain the administration systems which are used for the
purposes of corporation tax, inheritance tax and VAT.
Self Assessment
If an individual's tax liability for a tax year cannot be collected entirely by deduction at
source (see Chapter 2) or via the PAYE system (see Chapter 7), then the liability must be
formally assessed. The starting point in the assessment process is usually the completion of
a self assessment tax return†‡. The annual procedure is as follows:
(a) At the end of every tax year, a statutory "notice to file" is normally issued to each
taxpayer who is required to submit a self assessment tax return. Such a notice requires
that a return is made and delivered to HMRC either on paper or electronically. Paper
tax return forms (for those taxpayers who need them) can be downloaded and printed
from the HMRC website or may be obtained by telephoning HMRC. Voluntary tax
returns (i.e. returns submitted without a notice to file) are accepted and valid.
† In certain circumstances, HMRC is empowered to make an assessment of an individual's income
tax or capital gains tax liability without that person being first required to complete a tax return.
This "simple assessment" procedure may be used in straightforward cases where HMRC already
has sufficient information about the individual to make the assessment.
‡ The Government intends to replace tax returns with online "digital tax accounts" as part of the
"Making Tax Digital" project (see later in this chapter).
7
(b) The main paper tax return consists of a basic eight-page form. There are also several
sets of supplementary pages, each of which deals with a different type of income or
gains (e.g. income from self-employment). Taxpayers are required to complete only
those supplementary pages that are relevant to their circumstances.
(c) A short tax return (STR) is available for taxpayers with less complex tax affairs.
(d) Rather than completing a paper tax return, taxpayers can file returns electronically by
means of the internet and are encouraged to do so. Over 95% of self assessment tax
returns are in fact filed electronically.
(e) The information requested in a tax return relates to the tax year that has just ended. For
instance, the tax return notices issued in April 2022 required taxpayers to declare their
income and gains for tax year 2021-22.
(f) A tax return must be completed in full. It is not permissible to omit figures or to make
entries such as "see accounts" or "as submitted by employer". Unless asked to submit
accounts or other supporting documentation with the return, a taxpayer is under no
obligation to do so. However, it is necessary to retain all supporting documentation in
case HMRC enquires into the accuracy of a return.
(g) If a main tax return is submitted on paper, the taxpayer has the option of calculating his
or her own tax liability (using "tax calculation summary" pages) and submitting this
calculation to HMRC as part of the return. HMRC will calculate the tax liability for
taxpayers who do not take up this option or for those who submit the short tax return
(which does not include a self-calculation facility). However, if a paper return is
submitted late (see below), HMRC does not guarantee to advise the taxpayer of the
liability in time for the correct amount of tax to be paid on the correct date.
If a tax return is filed electronically, the tax liability is calculated by computer soft-
ware. In all cases, the resulting assessment is referred to as a "self-assessment".
(h) Self assessment tax returns must normally be filed (i.e. submitted to HMRC) on or
before the following dates:
- for paper returns, 31 October following the end of the tax year
- for returns filed electronically, 31 January† following the end of the tax year.
However, if the return notice is issued after 31 July following the end of the tax year
(but not after 31 October) the taxpayer has three months from the date of the notice to
submit a paper return. The deadline for electronic filing in such a case remains at 31
January. If the notice is issued after 31 October, the taxpayer has three months from
the date of the notice to submit the return either on paper or electronically.
† Extended to 28 February 2022 for 2020-21 tax returns, in view of the Covid-19 situation.
(i) Penalties are imposed if a return is filed late. Furthermore, the submission of a late
return may mean that the tax liability for the year is not determined until after the due
date of payment (see below). A taxpayer who pays tax late will incur interest and may
also incur a late-payment penalty (see Chapter 15).
8
(j) The 31 January which follows the end of a tax year is known as the "filing date" for
that year. For example, the filing date for tax year 2022-23 is normally 31 January
2024. However, if a return notice is issued after 31 October, the filing date becomes
the date which falls three months after the issue date of the notice.
(k) HMRC is empowered to correct a tax return (so as to rectify any obvious errors or
omissions or anything else that is believed to be incorrect) within nine months of the
date on which the return is filed. Similarly, the taxpayer has the right to amend his or
her tax return within 12 months of the filing date for that return.
(l) A taxpayer who has paid an amount of tax but now believes that this tax should not
have been paid (a situation that could be caused by an error in a tax return) may make
a claim for recovery of the overpaid tax. Such a claim must be made within four years
of the end of the tax year to which it relates. Depending upon the circumstances of the
case, HMRC may or may not accept the claim.
(m) The tax due in relation to a self-assessment is normally payable as follows:
(i) A first payment on account (POA) is due on 31 January in the tax year to which
the self-assessment relates.
(ii) A second POA is due on the following 31 July.
(iii) A final balancing payment is due on the following 31 January.
For example, the tax due in relation to a 2022-23 self-assessment would normally be
payable on 31 January 2023 (first POA), 31 July 2023 (second POA) and 31 January
2024 (balancing payment). Further information is given in Chapter 15 of this book.
(n) An employed taxpayer whose balancing payment does not exceed £3,000 may require
that this should be collected via the PAYE system (see Chapter 7). In such a case,
taxpayers who file their tax returns electronically must do so by 30 December so as to
give HMRC sufficient time to make the necessary arrangements.
Notification of chargeability to tax

An individual who has not received a notice to submit a tax return, but has taxable income
(or gains) of which HMRC is not aware, must notify HMRC of his or her chargeability to
tax within six months of the end of the tax year in which the income arises. However,
notification of chargeability is not required if all of the following conditions are satisfied:
(a) the individual has no capital gains
(b) the individual is not liable to tax at a rate which exceeds basic rate (see Chapter 2)
(c) all of the individual's income has been subject to deduction of income tax at source (see
Chapter 2) or has been dealt with via the PAYE system (see Chapter 7)
(d) the individual is not liable to a high income child benefit charge (see Chapter 7).
An individual who fails to notify chargeability within the permitted six-month period will
incur a penalty (see Chapter 15).
9
Determinations
If an individual fails to submit a tax return by the required date, an Officer of Revenue and
Customs may make a determination of the tax due, calculated according to "the best of his
information and belief". There is no right of appeal against a determination and the tax due
cannot be postponed. A determination can be displaced only if the return is filed.
Enquiries
HMRC may "enquire" into any tax return. The usual reason for opening an enquiry is the
suspicion that something is wrong with the return. However, some enquiry cases may be
selected at random and HMRC is under no obligation to justify the opening of an enquiry or
to state whether or not the case has been chosen randomly. Note that:
(a) If a tax return is filed by the due date, an enquiry cannot usually begin more than 12
months after the date on which the return was filed. This means that the "enquiry
window" for a return which is filed early closes correspondingly early.
(b) If a return is filed late or is amended after the date on which the return was due to be
filed, the enquiry window is extended until the quarter day which follows the first
anniversary of the date on which the return or amendment was filed. For this purpose,
the quarter days are 31 January, 30 April, 31 July and 31 October.
EXAMPLE
In April 2022, HMRC issues a notice requiring an individual to submit a tax return for the
year 2021-22. The return is submitted electronically to HMRC on 8 December 2022.
(a) State the date by which any enquiry into the above return must begin.
(b) How would the situation differ if the return was submitted on 17 March 2023?
Solution
(a) The return is filed before the due date (31 January 2023). So any enquiry must begin
within 12 months of the date that the return is filed (i.e. by 8 December 2023).
(b) The return is filed late. Any enquiry must begin by the quarter day which follows the
first anniversary of the date that the return is filed (i.e. by 30 April 2024).
Discovery assessments
HMRC may raise a "discovery assessment" if it is discovered that full disclosure has not
been made in a tax return and tax has been lost as a result.
The time limit for making a discovery assessment is normally four years after the end of
the tax year concerned. This increases to six years if the taxpayer has been negligent and 20
years if the taxpayer has been dishonest. But the normal time limit is 12 years if an offshore
matter is involved, increasing to 20 years in the case of dishonesty.
10
Record keeping
Taxpayers are required to keep proper records so that they can make an accurate tax return
and (if necessary) substantiate the figures entered on the return. A taxpayer who is in
business or who lets property must normally preserve these records for five years after the
31 January which follows the end of the tax year concerned. Otherwise, records must be
preserved for 12 months after the 31 January which follows the end of the tax year. For
example, records for tax year 2022-23 must normally be retained until 31 January 2029 by
a taxpayer who is in business or who lets property and until 31 January 2025 otherwise.
Appeals
Taxpayers have the right of appeal against many HMRC decisions. For example, a taxpayer
may appeal against a discovery assessment or against an HMRC amendment to a self-
assessment. The main features of the appeals system are as follows:
(a) An appeal must be sent to HMRC in writing within 30 days of the disputed decision.
(b) The taxpayer may also apply to postpone payment of all or part of any tax which is
payable as a result of the decision, though interest will continue to accrue on the
postponed amount until the appeal is settled. However, postponement is generally not
available if the appeal relates to the use of a tax avoidance scheme covered by the
DOTAS rules (see below) or arises in connection with arrangements which have been
counteracted by HMRC under the GAAR (see below).
(c) On receiving an appeal, HMRC considers the taxpayer's reasons for disputing the
decision. Most appeals are settled by discussion and agreement at this stage.
(d) If the taxpayer and HMRC are unable to agree, the taxpayer will usually be offered an
internal review of the decision. A taxpayer who wishes to accept this offer must
normally do so within 30 days. An internal review is carried out by an HMRC officer
who has not previously been involved with the disputed decision and is usually
completed within 45 days. The review officer then writes to the taxpayer to inform him
or her of the review's conclusions.
(e) A taxpayer who rejects the offer of an internal review may appeal to a tribunal within
30 days of the date of the offer letter. Otherwise, an appeal to a tribunal may be made
within 30 days of the date of the review conclusion letter.
(f) Most appeals are dealt with by the Tax Chamber of the First-tier Tribunal. However,
more complex appeals may be heard by the Tax and Chancery Chamber of the Upper
Tribunal. The Upper Tribunal also hears appeals against First-tier Tribunal decisions.
(g) If either HMRC or the person concerned is dissatisfied with a decision made by the
Upper Tribunal, a dispute on a point of law may be referred to the Court of Appeal.
11
(h) The costs of bringing an appeal before the First-tier Tribunal are usually fairly modest.
Parties to the appeal bear their own costs and so a taxpayer who loses an appeal is not
normally required to pay HMRC's costs (unless the taxpayer has acted wholly
unreasonably). The costs of taking an appeal to higher authority can be very high and
an unsuccessful taxpayer may be required to pay HMRC's costs in defending the appeal
as well as his or her own costs.
Tax evasion
Taxpayers are required to provide information which is correct and complete. Dishonest
behaviour (e.g. concealing a source of income) is known as tax evasion and is against the
law. On summary conviction in a magistrates' court, an offender may be imprisoned for up
to six months. If the conviction is obtained on indictment in a higher court, the maximum
prison term is seven years. In either case, a fine of any amount may also be imposed.
Tax avoidance
Taxpayers are entitled to organise their financial affairs in such a way that their tax burden
is minimised. This perfectly legal activity is known as tax avoidance. For example, a tax-
payer might legally avoid income tax and/or capital gains tax by moving funds into a tax-
efficient investment (see Chapter 6). Tax avoidance (which is legal) should be sharply
contrasted with tax evasion (which is not).
Tax avoidance is acceptable within limits but, over the years, tax advisors have shown
great ingenuity in devising very complex and highly artificial tax avoidance schemes to
exploit "loopholes" in the tax system. These schemes often result in a significant loss of tax
revenue until eventually blocked by specific anti-avoidance legislation. So as to limit the
effectiveness of tax avoidance schemes, a regime known as DOTAS (Disclosure of Tax
Avoidance Schemes) has been introduced which requires certain disclosures by those who
devise such schemes or use them. A brief summary of the requirements is as follows:
(a) Those who promote and market schemes which bear certain "hallmarks" of tax
avoidance are required to provide HMRC with details of each scheme. Promoters must
provide a description of the scheme, including details of its tax consequences and the
statutory provisions on which it relies. The scheme is then registered by HMRC and is
allocated a reference number.
(b) Taxpayers using such a scheme are required to quote the reference number of the
relevant scheme in their tax returns. Taxpayers who develop their own "in-house" tax
avoidance schemes must provide details of each scheme directly to HMRC.
The DOTAS rules are intended to provide HMRC with advance warning of tax avoidance
schemes, so enabling swifter and more effective investigation and counteraction.
12
General anti-abuse rule (GAAR)

Finance Act 2013 introduced a "general anti-abuse rule" (GAAR) into UK tax law. This rule
applies to income tax, capital gains tax, inheritance tax, corporation tax and certain indirect
taxes. The aim of the GAAR is to counteract tax advantages arising from abusive tax
arrangements. Tax arrangements are defined as "abusive" if they cannot be regarded as
reasonable in relation to the relevant tax law, having regard to whether the arrangements:
(a) are consistent with the principles on which the relevant tax law is based
(b) involve any contrived or abnormal steps
(c) are intended to exploit any shortcomings in the tax law.
The GAAR empowers HMRC to make "just and reasonable" adjustments to counteract the
tax advantages that would otherwise arise from tax arrangements that are deemed to be
abusive. These adjustments may involve increasing a taxpayer's tax liability or imposing a
tax liability where otherwise there would be none. However, before making any such
adjustments, HMRC must comply with the following procedure:
(a) If an officer of HMRC considers that a tax advantage has arisen as a result of abusive
tax arrangements, the taxpayer concerned must be provided with a written notice to
that effect. The notice must explain why HMRC considers the arrangements to be
abusive and must set out the proposed counteraction. The taxpayer then has 45 days in
which to make written representations in response to this notice.
(b) If, after considering any representations received from the taxpayer, HMRC still
believes that counteraction should be taken, the matter must then be referred to the
GAAR Advisory Panel (an independent panel established for this purpose). The
taxpayer must be notified that the matter is being referred in this way and then has 21
days in which to make written representations to the Advisory Panel.
(c) The GAAR Advisory Panel considers the tax arrangements concerned and produces an
opinion notice, stating whether or not (in the opinion of the Panel members) the
arrangements are abusive. HMRC must then issue a notice to the taxpayer, setting out
whether the tax arrangements are to be counteracted.
(d) A penalty† will generally apply in cases where abusive tax arrangements have been
successfully counteracted by means of the GAAR. The penalty is equal to 60% of the
additional tax payable as a result of the counteraction (see Chapter 15).
Taxpayers may appeal against an HMRC decision to counteract tax arrangements. When
considering such an appeal, the tribunal or court must take into account the opinion
expressed by the GAAR Advisory Panel.
† The Government has also introduced a penalty for the "enablers" of abusive tax arrangements
which are defeated by HMRC. An enabler is typically someone who designs abusive tax arrange-
ments and markets them to clients The amount of the penalty is equal to 100% of the fees charged
by the enabler to clients who use the arrangements in the hope of gaining a tax advantage.
13
Making Tax Digital (MTD) for income tax

In 2015, it was announced that self assessment tax returns would be replaced by "digital tax
accounts". Over 20 million individuals now have these accounts, which are pre-populated
with information already held by HMRC (e.g. employment income, interest received etc).
The next step in the phasing-in of "Making Tax Digital" for income tax self assessment
(MTD ITSA) will be implemented on 6 April 2024. As from that date, most self-employed
taxpayers and landlords will be required to maintain digital accounting records and submit
information to HMRC digitally†. The main features of the system are as follows:
(a) In general, taxpayers who are self-employed or have income from property will be
required to keep digital records of their transactions (e.g. income and expenses) using
"functionally compatible software" which complies with HMRC specifications.
(b) Every three months, taxpayers must use this software to provide a quarterly update to
HMRC. The standard quarters for a tax year are the three-month periods ending on 5
July, 5 October, 5 January and 5 April. However, taxpayers may elect instead to use
quarters ending on 30 June, 30 September, 31 December and 31 March.
(c) In all cases, the deadlines for filing the quarterly updates fall one month after the end
of the standard quarters i.e. 5 August, 5 November, 5 February and 5 May. There are
penalties for making a late submission or for submitting a late EOPS (see below).
(d) Taxpayers must also provide HMRC with an "end of period statement" (EOPS) at the
end of each tax year. Presumably taxpayers with both income from self-employment
and income from property will need to supply two such statements.
(e) The EOPS is used to make any necessary accounting adjustments and to claim reliefs
such as capital allowances (see Chapter 11). It must be submitted using MTD software.
The deadline for submission is 31 January following the end of the tax year.
(f) Lastly, taxpayers must make a "final declaration" at the end of each tax year. This
replaces the self assessment tax return and is used to declare any personal income and
to submit claims for further reliefs (if any). This must be submitted by 31 January
following the end of the tax year. Once again, there are penalties for filing late.
Taxpayers with qualifying income not exceeding £10,000 (before deducting expenses) are
exempt from MTD ITSA. Qualifying income is the sum of the person's income from self-
employment and income from property for the year concerned. Taxpayers whose income
does not exceed the limit may nonetheless join MTD ITSA if they so wish. There is also an
exemption for taxpayers who are "digitally excluded", either on religious grounds or because
of their age, disability or location.
† MTD for VAT was introduced for larger businesses on 1 April 2019 and was extended to all VAT-
registered businesses (with a few exceptions) on 1 April 2022 (see Chapter 30). MTD will also be
extended to corporation tax in due course, but not until April 2026 at the earliest.
14
The HMRC Charter
The HMRC Charter sets out the service and standards of behaviour that taxpayers should
expect when dealing with HMRC. In brief, a taxpayer can expect that HMRC will:
• provide services that are accessible, easy and quick to use, at minimum cost
• provide accurate, consistent and clear information
• be responsive, answer questions quickly and rectify any mistakes as soon as possible
• work to make sure that everyone pays the right amount of tax
• assume that taxpayers are telling the truth, unless there is evidence to the contrary
• take firm action against those who bend or break the law
• be aware of the taxpayer's personal situation and provide support if necessary
• protect taxpayer information and use that information fairly and lawfully
• treat the taxpayer with respect.
In return, HMRC expects taxpayers to give full, accurate and timely answers when asked
for information and to treat HMRC staff with respect.
The Adjudicator
An independent and impartial Adjudicator considers complaints received from taxpayers
who are not satisfied with the quality of the service they have received from HMRC. The
Adjudicator writes an annual report and makes recommendations for improvements to
HMRC procedures and practices. The Adjudicator is not empowered to hear tax appeals.
Summary
4 The main direct taxes comprise income tax, capital gains tax (CGT), inheritance tax
and corporation tax. National Insurance Contributions (NICs) can also be regarded as
a form of direct taxation. Indirect taxes include VAT, stamp duty and excise duties.
4 Taxation law is a combination of both statute law and case law. Statements made by
the tax authorities provide information on the authorities' interpretation of the law.
4 The tax year for individuals runs from 6 April to the following 5 April. The corporation
tax financial year runs from 1 April to the following 31 March.
4 Individuals who fall within Self Assessment are normally required to submit an annual
tax return. Paper returns must be filed by 31 October following the end of the tax year.
Returns submitted electronically must be filed by the following 31 January.
4 Taxpayers who submit a paper tax return have the option of calculating their own tax
liability. If a return is submitted electronically, the liability is calculated by HMRC's
computer software. The resulting assessment is referred to as a "self-assessment".
15
4 The tax due in relation to a self-assessment is normally satisfied by making two pay-
ments on account (which fall due on 31 January in the tax year concerned and on the
following 31 July) and then a balancing payment on the following 31 January.
4 A taxpayer who has not received a tax return notice, but has taxable income or gains of
which HMRC is not aware, must notify HMRC of his or her chargeability to tax within
six months of the end of the tax year in which the income arises.
4 If a tax return is submitted by the required filing date, HMRC cannot usually initiate
an enquiry into the return more than 12 months after the date on which the return is
submitted. Discovery assessments may be made after the enquiry window has closed
if it is discovered that the taxpayer has not made full disclosure of all relevant facts.
4 Tax appeals which cannot be settled by agreement between the taxpayer and HMRC
are dealt with by a two-tier tribunals system. Disputes on a point of law may be further
referred to the Court of Appeal.
4 Tax evasion involves dishonest conduct by the taxpayer and is illegal. Tax avoidance
involves the sensible arrangement of the taxpayer's affairs so as to minimise the tax
liability and is legal. However, abusive tax avoidance schemes may fall foul of the
general anti-abuse rule (GAAR) and be counteracted by HMRC.
4 Making Tax Digital (MTD) for income tax will be implemented as from 6 April 2024.
Most self-employed taxpayers and landlords will be required to use MTD-compliant
software to keep digital records of their income and expenses and to submit quarterly
updates to HMRC. It will also be necessary to provide HMRC with an annual end of
period statement (EOPS) and this must also be submitted digitally.
4 Taxpayers with gross income from self-employment and gross income from property
not exceeding a total of £10,000 per annum will be exempt from MTD but may join if
they so wish. Digitally excluded taxpayers will also be exempt.
Multiple choice questions

A set of multiple choice questions for this chapter is available on the website which accompanies this
book. The website can be accessed at go.pearson.com/uk/he/resources.
16
Chapter 2
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Introduction
Income tax assessments are computed for each tax year (or "year of assessment") and are
based upon the taxpayer's total income for the year from all sources, ignoring any income
which is exempted from income tax. This chapter explains the main features of an income
tax computation, in preparation for the much more detailed information which is provided
in subsequent chapters.
Most of the primary legislation relating to income tax used to be located in the Income and
Corporation Taxes Act 1988, but this legislation has now been mostly rewritten and moved
to more recent statutes. Income tax legislation can now be found mainly in the Income Tax
(Earnings and Pensions) Act 2003, the Income Tax (Trading and Other Income) Act 2005
and the Income Tax Act 2007, as amended by subsequent Finance Acts.
Taxable persons
Individuals who are resident in the UK for a tax year are generally chargeable to income tax
on all of their income for that year, including both income arising in the UK and income
arising overseas. However, there are two main exceptions to this general rule:
(a) Some forms of income are exempt from income tax altogether (see below).
(b) UK residents who are not UK-domiciled (i.e. whose permanent home is not the UK)
may claim that their overseas income should be subject to UK income tax only to the
extent that the income is remitted to the UK. However, this may lead to an additional
tax charge of £30,000 or more in some cases (see Chapter 32).
Individuals who are not resident in the UK are liable to pay income tax on their UK income
only (see Chapter 32). Income tax is payable by:
(a) adults, on their own income and on their share of the income of a partnership
(b) children, if they have sufficient income to pay tax (see below)
(c) trustees, on the income of a trust or settlement
(d) personal representatives, on income arising from the estate of a deceased person.
17
Child's income derived from parent

If an unmarried minor child receives investment income which is derived from a parent, this
income is treated for tax purposes as the income of the parent, not the child, unless the
amount involved does not exceed £100 (per parent per child) in the tax year. This prevents
parents from transferring income-bearing assets to a child so as to take advantage of the
child's personal allowance (see Chapter 3).
However, income which is derived from parental contributions to a Child Trust Fund
account or a Junior ISA (see Chapter 6) does not count towards the £100 limit.
Exempt organisations and individuals

Most organisations are generally exempt from income tax, subject to various restrictions
and exceptions. Certain individuals are also exempt. Exempt organisations and individuals
include the following:
(a) companies, which are liable to corporation tax rather than income tax
(b) clubs and societies, which are also liable to corporation tax
(c) registered pension schemes
(d) registered charities (on income used for charitable purposes)
(e) representatives of foreign countries (e.g. ambassadors)
(f) visiting members of foreign armed forces (on their service pay and on income arising
from a source outside the UK).
Classification of income
Income is classified for income tax purposes into a number of types or categories, each with
its own set of rules for calculating the amount of income of that type which arises in a tax
year. These rules are located in the Income Tax (Earnings and Pensions) Act 2003 and in
the Income Tax (Trading and Other Income) Act 2005. The main classes of income which
are subject to income tax are as follows:
Statute Type of income Chapter of this book
ITEPA 2003 Employment income Chapters 7-8
Pensions Chapter 7
Social security income Chapter 7
ITTOIA 2005 Trading income Chapters 9-13
Property income Chapter 5
Interest Chapter 6
Dividends Chapter 6
Miscellaneous income Chapter 6
Each of these classes of income is considered in some detail in later chapters of this book.
18
CHAPTER 2: Introduction to Income Tax
Exempt income
Certain types of income are specifically exempt from income tax and should therefore be
completely ignored when preparing income tax computations. Some of the more important
sources of exempt income are as follows:
(a) Exempt savings and investment income (see Chapter 6):
- income from Individual Savings Accounts
- income from National Savings Certificates
- interest arising from a Save As You Earn arrangement linked to a tax-advantaged
employee share option scheme (see Chapter 7)
- income from investments held in a Child Trust Fund account
- dividends on shares held in a Venture Capital Trust (subject to conditions)
(b) Exempt employment income (see Chapter 7):
- certain minor benefits provided by employers for their employees
- bonus payments of up to £3,600 per annum received by employees of companies
controlled by an employee ownership trust
- the first £30,000 of "ex gratia" compensation received for loss of employment
- certain lump sums payable under registered pension schemes (e.g. a lump sum
payable at the commencement of a pension)
- the operational allowance paid to UK armed forces serving in specified locations
(c) Exempt property income (see Chapter 5):
- gross property income of up to £1,000 per annum
- income of up to £7,500 per annum received under the "rent-a-room" scheme
(d) Other exempt income:
- gross trading income of up to £1,000 per annum (see Chapter 9)
- winnings from betting, competition prizes and premium bond prizes
- maintenance payments (see Chapter 4)
- income from scholarships
- wound and disability pensions
- certain social security benefits (e.g. child benefit† and housing benefit)
- income from the sale of electricity generated by home microgeneration systems
- most commissions, discounts and cashbacks received by ordinary retail customers
- damages or compensation received for personal or professional injury
- certain payments made to individuals who foster or adopt children.
† Although child benefit is exempt from income tax, a taxpayer who receives child benefit and has
an income exceeding £50,000 p.a. may be subject to an income tax charge known as the "high
income child benefit charge" (see Chapter 7).
19
Structure of an income tax computation
In order to calculate a taxpayer's income tax liability for a tax year it is necessary to bring
together all of the taxpayer's income into a single income tax computation. The structure of
this computation is specified in the Income Tax Act 2007. A typical computation for the
year 2022-23 might appear as follows:
£
Business profits 59,230
Loan interest taxed at source (pre-tax equivalent) 640
Bank interest received 60
———
Total income 59,930
Less: Tax reliefs 750
———
Net income 59,180
Less: Personal allowance 12,570
———
Taxable Income 46,610
———
Income tax†
37,700 @ 20% 7,540.00
8,210 @ 40% 3,284.00
500 @ 0% 0.00
200 @ 40% 80.00
——— ————
46,610 10,904.00
———
Less: Tax reductions 0.00
————
Tax borne 10,904.00
Add: Tax withheld on payments 0.00
————
Tax liability for the year 10,904.00
Less: Tax paid by deduction at source 128.00
————
Tax payable 10,776.00
————
† This section of the computation would be different for a Scottish taxpayer (see below).
All of the terms used in this computation are explained in detail in this chapter and in later
chapters. For now, the main features of the computation are as follows:
(a) The taxpayer's "total income" for the tax year is calculated by adding together income
from all sources, including the pre-tax equivalent of any income from which tax has
been deducted at source but excluding income which is exempt from income tax.
(b) Relief for certain payments made by the taxpayer (see Chapter 4) together with certain
loss reliefs (see Chapters 5 and 12) and relief for certain pension contributions (see
Chapter 14) are deducted from total income, giving "net income".
20
(c) Any personal allowance available to the taxpayer is deducted from net income to give
"taxable income". The personal allowance for tax year 2022-23 is usually £12,570,
ensuring that those on very low incomes are not liable to income tax. However, the
allowance is reduced (possibly to zero) for those on high incomes (see Chapter 3).
(d) Income tax is charged on the taxable income figure, using the rates of tax in force for
the year. The amount of tax calculated in this way is then subject to a number of
adjustments and the result is the tax payable to HM Revenue and Customs.
(e) The tax borne by the taxpayer is the amount of income tax suffered for the year. This
may be different from the tax liability, which is the amount of tax which must be
accounted for to HMRC and the tax payable which is the income tax remaining to be
paid after deducting any tax already paid for the year. These distinctions will become
clearer in the course of the next two chapters.
A formal tax computation is not required for every taxpayer. For example, a tax computation
is generally not required for an individual whose income is derived entirely from employ-
ment, since the correct amount of tax is normally deducted automatically by the PAYE
system (see Chapter 7). However, the only way to calculate the income tax liability in more
complex cases is to prepare a tax computation.
Married couples and civil partners
Married couples are taxed independently, which means that the husband's income and the
wife's income are taxed completely separately. This is also the case for civil partners who
have entered into a legally-recognised civil partnership.
If a married couple (or civil partners) have income which is derived from an asset held in
their joint names, such as interest on a joint bank account, the amount of that income will
normally be divided between them equally for tax purposes. But if the source of income is
genuinely held between them in some other proportion, the couple may make a declaration
to that effect and the income will then be divided between them as appropriate.
Rates of income tax for 2022-23
An individual's taxable income is taxed according to the rates of income tax in force for the
year in question. For non-Scottish taxpayers, the main income tax rates and thresholds for
tax year 2022-23 are as follows:
Band Rate
First £37,700 of taxable income 20% (the "basic rate")
Next £112,300 of taxable income (up to £150,000) 40% (the "higher rate")
Remaining taxable income after the first £150,000 45% (the "additional rate")
21
Note that:
(a) The point at which basic rate tax gives way to higher rate tax is known as the "basic
rate limit". For non-Scottish taxpayers in 2022-23, this limit is £37,700† and the first
£37,700 of taxable income is referred to as the "basic rate band". Similarly, the figure
of £150,000 is known as the "higher rate limit" and taxable income lying between
£37,700 and £150,000 may be referred to as the "higher rate band".
(b) Savings income and dividend income are treated specially, as explained below.
(c) Calculations are made to the nearest pound when calculating taxable income. The
amount of tax due on that income is calculated to the nearest penny in this book but
HMRC will generally accept calculations made to the nearest pound.
† Finance Act 2021 freezes the basic rate limit at £37,700 until the end of tax year 2025-26.
Scottish taxpayers
Scotland Act 2016 gives the Scottish Parliament full control over the income tax rates and
thresholds which should apply to the non-savings income of Scottish taxpayers†. The term
"non-savings income" refers to taxable income which is neither savings income nor
dividends (see later in this chapter) and encompasses mainly income from employment or
self-employment and income from property. For 2022-23, the income tax bands and rates
which apply to the non-savings income of Scottish taxpayers are as follows:
Band Rate
First £2,162 of taxable non-savings income 19% (the "starter rate")
Next £10,956 (up to £13,118) 20% (the "basic rate")
Next £17,974 (up to £31,092) 21% (the "intermediate rate")
Next £118,908 (up to £150,000) 41% (the "higher rate")
Remainder after the first £150,000 46% (the "top rate")
Therefore the starter rate limit for 2022-23 is £2,162, the basic rate limit is £13,118, the
intermediate rate limit is £31,092 and the higher rate limit is £150,000.
† Scottish taxpayers are broadly defined as those who live in Scotland. Please see the Appendix at
the end of this chapter for more information.
EXAMPLE 1
Calculate the 2022-23 income tax liability of a non-Scottish taxpayer with taxable income
(i.e. income remaining after deducting any available personal allowance) of:
(a) £11,730 (b) £15,280 (c) £30,000
(d) £33,150 (e) £58,800 (f) £231,400
Assume that none of the income is derived from savings or dividends. How would these
income tax liabilities differ in the case of a Scottish taxpayer?
22
Solution
Non-Scottish taxpayer:
(a) £11,730 @ 20% = £2,346.00
(b) £15,280 @ 20% = £3,056.00
(c) £30,000 @ 20% = £6,000.00
(d) £33,150 @ 20% = £6,630.00
(e) £37,700 @ 20% + £21,100 @ 40% = £15,980.00
(f) £37,700 @ 20% + £112,300 @ 40% + £81,400 @ 45% = £89,090.00
Scottish taxpayer:
(a) £2,162 @ 19% + £9,568 @ 20% = £2,324.38
(b) £2,162 @ 19% + £10,956 @ 20% + £2,162 @ 21% = £3,056.00
(c) £2,162 @ 19% + £10,956 @ 20% + £16,882 @ 21% = £6,147.20
(d) £2,162 @ 19% + £10,956 @ 20% + £17,974 @ 21% + £2,058 @ 41% = £7,220.30
(e) £2,162 @ 19% + £10,956 @ 20% + £17,974 @ 21% + £27,708 @ 41% = £17,736.80
(f) £2,162 @ 19% + £10,956 @ 20% + £17,974 @ 21% + £118,908 @ 41% +
£81,400 @ 46% = £92,572.80
Note that a Scottish taxpayer pays less income tax (on non-savings income) than a non-
Scottish taxpayer in 2022-23 until taxable income reaches £15,280. At this point the tax
liabilities are equal. But if taxable income exceeds £15,280, a Scottish taxpayer will pay
more income tax than a non-Scottish taxpayer.
Welsh taxpayers
Wales Act 2014 gives the National Assembly for Wales the right to set Welsh rates of
income tax. The rates of income tax which apply to the non-savings income of Welsh
taxpayers† are derived by subtracting 10p in the pound from the basic rate, the higher rate
and the additional rate which apply in the remainder of the UK (other than Scotland) and
then adding on the Welsh rates set for that year for the purpose of calculating the Welsh
basic rate, the Welsh higher rate and the Welsh additional rate.
However, the three Welsh rates for tax year 2022-23 have all been set at 10%. Therefore
the rates of income tax payable by Welsh taxpayers for 2022-23 are the same as those paid
elsewhere in the UK (apart from in Scotland). For instance, the Welsh basic rate is (20% –
10% + 10%) = 20%.
† Welsh taxpayers are broadly defined as those who live in Wales and the definition of a Welsh tax-
payer is very similar in principle to the definition of a Scottish taxpayer (see the Appendix at the
end of this chapter).
23
Income taxed at source
Certain types of income are taxed at source, which means that basic rate income tax is
deducted from the income before the taxpayer receives it. In tax year 2022-23, the main
types of income normally received net of basic rate tax are:
(a) debenture and other loan interest† paid by UK companies
(b) interest on UK government securities ("gilt-edged" securities) if the taxpayer applies
to receive this interest with tax deducted at source
(c) the income element of a purchased life annuity (as long as the annuity has not been
purchased with assets held under a registered pension scheme)
(d) patent royalties.
† Bank and building society interest is paid gross (i.e. without deduction of tax at source).
Income which has been taxed at source must still be included in the taxpayer's income tax
computation, despite the fact that tax has already been paid. This may seem unnecessary but
there are two good reasons for including such income in the tax computation:
(a) It is important to derive correct figures for the taxpayer's "total income" and "net
income", as will become clearer in later chapters.
(b) The basic rate tax which has been deducted at source might be inadequate or might be
excessive, depending upon the taxpayer's individual circumstances. The only way to
check this is to aggregate the income concerned with all of the taxpayer's other income
in a single tax computation.
In a tax computation, all income must be shown "gross". In other words, the amount of
income shown must be the amount of the income before any income tax was deducted at
source. When the tax liability has been calculated, tax paid by deduction at source is
subtracted and the taxpayer is then required to pay only the balance of the liability. A tax
refund is given if tax deducted at source exceeds the tax liability for the year.
If income is taxed at source, the amount received by the taxpayer is often referred to as
the "net" amount of the income. This usage of the term "net" must be distinguished from the
entirely different usage of the same term in the Income Tax Act 2007, which defines "net
income" as being equal to a taxpayer's total income less tax reliefs.
Grossing up
If income has been received net of basic rate (20%) income tax, the gross amount of the
income can be ascertained by multiplying the amount received by 100/80. This calculation
is often referred to as "grossing up". When wages and salaries are received net of income
tax, the gross pay and the amount of tax deducted can be ascertained by examining the end-
of-year certificate supplied by the taxpayer's employer (see Chapter 7).
24
Savings income
The tax liability on a taxpayer's "savings income" is calculated differently from the tax
liability on non-savings income. The main categories of savings income are:
(a) interest received from banks, building societies and NS&I, plus interest received on
gilt-edged securities and corporate bonds (e.g. debentures and loan stocks)
(b) the income element of purchased life annuities (other than annuities from registered
pension schemes, which are treated as non-savings income)
(c) certain foreign income (see Chapter 32).
But savings income does not include dividends received. The tax regime which applies to
dividends is explained later in this chapter.
An important difference between the taxation of savings income and non-savings income
is that savings income which falls into the first £5,000 (for 2022-23) of taxable income is
taxed at the starting rate for savings of 0%, so that such income is effectively tax-free. If a
taxpayer has both savings income and non-savings income, it is necessary to split taxable
income between these two categories before the tax liability can be calculated. Note that:
(a) Non-savings income is regarded as the bottom layer or "slice" of taxable income and
savings income is regarded as a higher layer. This means that the starting rate will not
be available (in 2022-23) if taxable income includes non-savings income of at least
£5,000. Otherwise, some or all of the taxpayer's savings income (if any) will fall into
the first £5,000 of taxable income and will be taxed at the starting rate of 0%.
(b) Tax reliefs and the personal allowance are set against income in the way which gives
the lowest tax liability. In general, these deductions should be made from non-savings
income in priority to savings income, since non-savings income cannot benefit from
the 0% rate. However, there are exceptions to this rule (see later in this chapter).
(c) The figure of £5,000 (for 2022-23) is known as the starting rate limit for savings.
A further difference between the taxation of savings income and non-savings income is that
the income tax liability on a taxpayer's savings income is unaffected by whether or not the
taxpayer is Scottish (or Welsh). The Scottish tax rates and limits (and the Welsh rates) listed
earlier do not apply to savings income, which is always taxed using the rates and limits that
apply throughout the remainder of the UK (see examples below).
Personal savings allowance

ITA 2007 provides that taxpayers are entitled to a personal "savings allowance" (PSA) of
up to £1,000 per tax year. In general, this means that the first £1,000 of savings income
included in taxable income is taxed at the "savings nil rate" of 0%. However, the PSA is
lower than £1,000 in some cases (see below).
It is important to realise that the PSA is not used against any savings income which falls
within the first £5,000 of taxable income and so already benefits from the starting rate for
25
savings. The PSA is used only against savings income which falls beyond the first £5,000
of taxable income. So a taxpayer with taxable non-savings income of £nil in 2022-23 and a
PSA of £1,000 will pay 0% income tax on the first £6,000 of taxable savings income. Note
the following important points relating to the PSA:
(a) A taxpayer's PSA for 2022-23 is £1,000 unless:
(i) taxable income for the year exceeds the non-Scottish† basic rate limit (but does
not exceed the higher rate limit) in which case the PSA is £500
(ii) taxable income for the year exceeds the higher rate limit, in which case the PSA
for the year is £nil.
The non-Scottish basic rate limit for 2022-23 is normally £37,700 (see above) and the
higher rate limit is normally £150,000. However, these figures are both increased if the
taxpayer makes Gift Aid donations in the year (see Chapter 4) or makes pension
contributions that are "relieved at source" (see Chapter 14).
† In the case of Scottish taxpayers, the non-Scottish basic rate limit of £37,700 is used both for
the purpose of determining the amount of the PSA to which the taxpayer is entitled and when
calculating the amount of income tax due on savings income. This ensures that the amount of
income tax payable on the savings income of a Scottish taxpayer is exactly the same as would
be payable if he or she were not a Scottish taxpayer.
(b) Although savings income falling within the PSA is effectively tax-free, the income
concerned is still part of the taxpayer's taxable income for the year. This is significant
when determining whether taxable income exceeds the basic rate limit or higher rate
limit (see above) and may also be significant when calculating the taxpayer's entitle-
ment to personal allowances (see Chapter 3). The same point applies to savings income
which is taxed at the starting rate for savings.
EXAMPLE 2
Calculate the personal savings allowance available in 2022-23 to a taxpayer with taxable
income for the year (i.e. net income less any available personal allowance) of:
(a) £20,000 (b) £37,701 (c) £63,000 (d) £375,000
Assume that there are no Gift Aid donations or pension contributions during the year.
Solution
(a) Taxable income does not exceed £37,700, therefore the PSA is £1,000.
(b) Taxable income exceeds £37,700 but does not exceed £150,000. Therefore the PSA
is £500. Exceeding the basic rate limit by £1 has reduced the PSA by £500.
(c) Taxable income exceeds £37,700 but does not exceed £150,000. The PSA is £500.
(d) Taxable income exceeds £150,000, therefore the PSA is £nil.
Note: These PSA figures are the same whether or not the taxpayer is Scottish.
26
EXAMPLE 3
In 2022-23, Robert (who is not a Scottish taxpayer) has business profits of £40,000 and
receives bank interest of £1,250. His personal allowance is £12,570. Calculate Robert's
income tax liability for the year. How would this differ for a Scottish taxpayer?
Solution
Total Non-savings Savings
£ £ £
Business profits 40,000 40,000
Bank interest 1,250 1,250
——— ——— ———
Total income 41,250 40,000 1,250
Less: Personal allowance 12,570 12,570
——— ——— ———
Taxable income 28,680 27,430 1,250
——— ——— ———
Income tax due
Non-savings income : Basic rate 27,430 @ 20% 5,486.00
Savings income : Nil rate 1,000 @ 0% 0.00
: Basic rate 250 @ 20% 50.00
———
28,680
——— ————
Tax liability 5,536.00
————
Notes:
(i) Taxable income includes non-savings income of more than £5,000. Therefore the
starting rate for savings is not available.
(ii) Taxable income does not exceed £37,700, so the PSA is £1,000. Savings income of
£1,000 is taxed at the savings nil rate.
(iii) Non-savings income occupies the first £27,430 of the basic rate band, so there is
£10,270 (£37,700 – £27,430) of this band remaining. Savings income is less than this
and is therefore taxed at 20% (apart from the first £1,000 covered by the PSA).
Scottish taxpayers
If Robert were a Scottish taxpayer, the income tax on his non-savings income would be
calculated using Scottish rates and limits. Taxable non-savings income is £27,430 so the
tax due on this income would be (£2,162 ´ 19%) + (£10,956 ´ 20%) + (£14,312 ´ 21%) =
£5,607.50. This would increase his total tax liability by £121.50 to £5,657.50.
It is important to appreciate that the tax due on savings income would be unaffected. The
PSA would still be determined by comparing taxable income (£28,680) with £37,700. And
the tax due on savings income would be calculated as above, using non-Scottish income
tax rates and limits.
27
EXAMPLE 4
In 2022-23, Roberta (who is not a Scottish taxpayer) has rental income of £16,770 and
receives building society interest of £1,100. Her personal allowance is £12,570. Calculate
the income tax liability for the year. How would this differ for a Scottish taxpayer?
Solution
£ £ £
Income from property 16,770 16,770
Building society interest 1,100 1,100
——— ——— ———
Total income 17,870 16,770 1,100
——— ——— ———
Taxable income 5,300 4,200 1,100
——— ——— ———
Income tax due
Non-savings income : Basic rate 4,200 @ 20% 840.00
Savings income : Starting rate 800 @ 0% 0.00
: Nil rate 300 @ 0% 0.00
———
5,300
——— ————
Tax liability 840.00
————
Notes:
(i) The non-savings income occupies £4,200 of the basic rate band. This allows £800
(£5,000 – £4,200) of the savings income to be taxed at the starting rate of 0%.
(ii) Taxable income does not exceed £37,700, so the PSA is £1,000.
(iii) The remaining £300 of savings income (£1,100 – £800) does not exceed £1,000, so
this is taxed at the savings nil rate.
Scottish taxpayers
If Roberta were a Scottish taxpayer, the income tax on her non-savings income would be
calculated using Scottish rates and limits. Taxable non-savings income is £4,200 so the tax
due on this income would be (£2,162 ´ 19%) + (£2,038 ´ 20%) = £818.38. This would reduce
her total liability by £21.62. The tax due on savings income would be unaffected.
28
EXAMPLE 5
In 2022-23, Kenneth (who is not a Scottish taxpayer) has business profits of £59,120 and
bank interest of £980. His personal allowance for the year is £12,570. He makes no Gift Aid
donations or pension contributions during 2022-23. Calculate Kenneth's income tax liability
for the year. Also explain how this liability would differ for a Scottish taxpayer.
Solution
£ £ £
Bank interest 980 980
——— ——— ———
Total income 60,100 59,120 980
——— ——— ———
Taxable income 47,530 46,550 980
——— ——— ———
Income tax due
: Higher rate 8,850 @ 40% 3,540.00
Savings income : Nil rate 500 @ 0% 0.00
: Higher rate 480 @ 40% 192.00
———
47,530
——— ————
————
Notes:
(ii) Taxable income exceeds £37,700, so the PSA is £500 and the first £500 of savings
income is taxed at the savings nil rate.
(iii) Non-savings income occupies the whole of the basic rate band. Therefore savings
income is taxed at 40% (apart from the first £500 which is covered by the PSA).
Scottish taxpayers
If Kenneth were a Scottish taxpayer, the income tax on his non-savings income would be
tax due on this income would be (£2,162 ´ 19%) + (£10,956 ´ 20%) + (£17,974 ´ 21%) +
(£15,458 ´ 41%) = £12,714.30. This would increase his total tax liability by £1,634.30 to
£12,906.30. The tax due on his savings income would be unaffected.
29
EXAMPLE 6
In 2022-23, Philip (who is not a Scottish taxpayer) has business profits of £240,235 and
building society interest of £1,600. His personal allowance for the year is zero. He makes
no Gift Aid donations or pension contributions during 2022-23. Calculate his income tax
liability for the year. Also explain how this liability would differ for a Scottish taxpayer.
Solution
£ £ £
Building society interest 1,600 1,600
——–— —–—— ———
Total income 241,835 240,235 1,600
Less: Personal allowance 0 0
———– —–—— ———
Taxable income 241,835 240,235 1,600
——–— —–—— ———
Income tax due
: Higher rate 112,300 @ 40% 44,920.00
: Additional rate 90,235 @ 45% 40,605.75
Savings income : Additional rate 1,600 @ 45% 720.00
——–—
241,835
——–— ——–——
———–—
Notes:
(ii) Taxable income exceeds the higher rate limit, so the PSA is £nil.
(iii) Non-savings income occupies the whole of the basic rate and higher rate bands, so
the bank interest is taxed at the additional rate of 45%.
Scottish taxpayers
If Philip were a Scottish taxpayer, the income tax on his non-savings income would be
tax due on this income would be (£2,162 ´ 19%) + (£10,956 ´ 20%) + (£17,974 ´ 21%) +
(£118,908 ´ 41%) + (£90,235 ´ 46%) = £96,636.90. This would increase his total liability by
£3,571.15 to £97,356.90. The tax due on savings income would be unaffected.
30
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sparkled with one of those disreputable and miscellaneous little
envelopes that Gabrielle affected: sometimes a hotel sheet,
sometimes a lined shiny page torn from an account book, but always
exquisite to David because of the fine square crowded writing and
the delicious freedom and cleverness of the phrases.
For two or three days a letter would make him exquisitely happy. He
always put off the work of answering for a fortnight if possible—but
sometimes he could not wait so long—to savour more fully the
privilege he felt it to be, and to lessen the interval before the next
letter from her.
When his answer had gone there was always a time of blankness.
David would walk past the Keyport post office, go back, ask casually
if there were letters—no matter. But when something approaching a
fortnight passed, he would find himself thinking of nothing else but
that precious little sheet; find himself declining invitations to Boston
or New York for fear of missing it for an unnecessary few days, find
himself wiring Rucker in the latter place, “If letters for me, please
forward.”
For the rest, when Sylvia wrote with charming regularity every week
Gabrielle was, of course, always mentioned, and almost always in a
way that gave David more pain than pleasure.
The doctor, Sylvia might write, for example, “of course madly in love
with Gay,” had said this or that about Tom’s staying where he was.
Or, “our fellow traveller, whose son is the nice Yale boy, has taken a
great fancy to my humble self, perhaps in self-defence, as the boy
can see nothing but Gabrielle.” Gabrielle “got a blue hat and a dark
blue suit in San Francisco, and looked stunning.” Gabrielle wanted to
add a line. And there, added, would be the precious line: “Love; I am
writing.”
What David suffered during these crowded months that were yet so
empty without, only David knew. He knew now that whatever his
feeling was, it was the only emotion of any importance that he had
ever known in his life. The departure for the war front, five years
before, somewhat reminded him of it, but, after all, those feelings
had been faint and vague compared to these. Buying his uniforms,
equipping his bag, cutting every tie with the old life, facing the utterly
unknown in the new, David remembered feeling some such utter
obsession and excitement as he felt now.
But, after the thrilling commencement, that military life had faded into
the stupidity of mismanaged training for what he had felt to be an ill-
conceived purpose. David could only remember it now as a boy’s
blind exultation and enthusiasm.
This other thing was the realest in the world—the devouring need of
a man for the one woman, the beautiful, inaccessible, wonderful
woman who could never again, lost or won, be put out of his life.
David was perhaps not so much humble as unanalytical; he never
had felt himself a particularly desirable husband, although at one
time, studying Sylvia’s future prospects with his characteristic
interest and concern, he had been obliged to recognize the fact that
her marriage to him would be an extremely suitable thing.
Now he felt that nothing about him was suitable or desirable. No
woman could possibly contemplate marriage with him with any
enthusiasm; least of all this beautiful woman of twenty, whose wealth
was the smallest of her advantages. David was not a particularly
successful painter, past thirty, leading the quietest and least thrilling
of lives. It was a part of the conscientiousness that these brilliant
Flemings and their exactions had bred in him, that he felt himself in
honour bound now not to complicate Gabrielle’s problems by any
hint of his own personal hopes or fears. She needed him too much,
in the management of her own and Tom’s business, for that. Self-
consciousness between them would have been a fresh trial for her,
just emerging from too many changes and sorrows.
Wastewater was all hers now, for Tom did not care to live there, even
if it had been the wisest thing in the world for him to do. He had
deeded it all to her, and she and Rucker had held a casual
correspondence regarding the new barns and John’s house, and the
prospect of a new Wastewater. It must be “rambly and irregular,”
Gabrielle had stipulated, “perhaps a little like one of those French
farmhouses of creamy white brick with the red roofs.” It must have
“one long nice room, with an open fireplace at the end, where supper
or breakfast could be brought in if it was snowing.” And she “would
love a hall with glass doors and fanlights at the front and back, so
that when you stood at the front door on a hot summer day you could
see wallflowers and gillies and things all growing in the back garden,
right straight through the house.”
Rucker, who did a good deal of this sort of thing, had been
immensely interested; indeed, he and his wife and the tiny baby
were established at Keyport with David now, so that his summer
holidays and week-ends might be spent in the neighbourhood. He
had submitted certain plans to Gabrielle in Los Angeles, and
Gabrielle had wired her approval from Mexico City; now they were to
commence building, but with some agitation on the part of Rucker,
who made worried references to “moving the hollies,” and “saving
those copper beeches and maples on the north front.”
“Mr. Rucker got those red tiles, John,” David said to-day to the
foreman, “and they come fourteen inches square. So just give me an
idea in a day or two how large that terrace is.”
“There’s Mr. Rucker now,” Etta said, disconsolately, as a Ford came
in the service gate, and turned toward the barns. “No, it isn’t,” she
added, peering.
They all looked in that direction as the car stopped, and a young
woman jumped out, and dismissed it, and came toward them.
CHAPTER XXI
She was tall, and wearing a dark blue suit under a belted brown
coat, a loose rich sable-skin about her shoulders. A blue hat, bright
with cornflowers was pressed down over her sunny hair.
David’s heart gave a great plunge, raced, stopped short, and began
to plunge again. It was really Gabrielle.
But she was so beautiful, she was so graceful and swift and young
and radiant, as she came toward them, that David was incapable of
speech, bereft of all emotion except the overpowering realization of
what she meant to him.
The day became incredibly glorious, became spring indeed, when
she put both her warm hands in his, and held him at arm’s-length,
and looked at him, and then at the reconstruction, and the young
green about her, with a great sigh of relief and joy that was half a
sob.
Perhaps her own emotions were also unexpectedly overwhelming,
for even while she laughed and greeted Etta and John and the dog
with quite her usual gaiety, David noticed an occasional break in her
eager voice and a film of tears in her shining eyes.
“Oh, David—Wastewater again!” she said. “If you knew—if you knew
how hungry I’ve been for the old place! Oh, David—what a wonderful
barn—but isn’t it delicious—and that’s your house, Etta, and it looks
so comfortable—like a little English inn—and the arch—David, it’s all
so wonderful! Oh, do tell me everything, everyone! I’m so glad to get
home——”
He had known that he loved her, but David had never dreamed that
he could love her like this. To see her take off the heavy brown coat
and consign it and the fur to Etta, and to have her straighten her little
white frills at throat and wrists of the trim little dark blue suit, in just
her old, busy way, and to have her fairly dance along at his side,
excitedly inspecting all that had happened and that was to happen,
was to be transported—for David—straight into a country of no laws
and no precedents. Gay, sweet and blue-eyed and husky of voice;
Gay, slender and eager and responsive; Gay, home again.
“But let me tell Etta and John my news before we leave them,” she
had said, in the first rush of greetings. “Who do you think has just
gotten married?”
“Not you, Miss Gabrielle, although goodness knows you look happy
enough for anything,” Etta had said, cheered in spite of her
determined efforts to resist.
“Not I—do you hear her, David! No, I’m to be next,” Gabrielle had
answered, with a gaiety that stabbed David to the heart. “No, but
Miss Sylvia and Mr. Tom were married a month ago, before we ever
left San Francisco,” she added, joyously.
“Good grief!” Etta said, in a hushed voice. David only fixed
astonished and suddenly enlightened eyes upon the girl’s face.
“Married in San Francisco,” Gabrielle repeated, nodding
triumphantly. “You’re not one bit more surprised than I am! Well, yes,
for I did suspect it,” she added, more moderately. “I knew that they
were falling in love with each other, of course. But I never dreamed
that they had done it until we were three days out! Then Sylvia
wouldn’t let me wireless, because she said everybody on the boat
would know. So we went on to Panama, and then she and Tom
wanted to go on farther, and Margret and I wanted to come home—
and here I am!”
Etta was by this time sufficiently recovered from her stupefaction to
ask for further details, and David, watching Gabrielle as she half
laughingly and half seriously gave them, had time to appreciate how
the girl had grown to womanhood in this time of absence. With a sort
of negligent readiness, and yet with a certain dignity, too, she
satisfied the eager questions of the older man and woman, all the
while reserving, he could see, the more intimate narrative for his
ears alone.
They were not to be alone immediately, however, for Etta and John
accompanied them through the barns, Etta harping plaintively upon
the quality of the buildings now in course of erection in the
Crowchester Manor Estates.
“But you won’t want a big house here, all by yourself. Them
Crowchester houses are handsomer than any Mr. Rucker ever
showed me,” Etta said.
“I had breakfast with Mrs. Rucker. Isn’t she always the nicest
person?” Gabrielle was thereby reminded to tell him. “And what a
ducky baby. We got in to New York yesterday morning, you know,
and came up on the night train. I went straight to your Keyport
house, hoping to find you, but you’d just gone. I left all my things
there, and of course I’m to stay there to-night.”
“You won’t be going away again, Miss Gabrielle?” John asked.
“Why, that depends——” She looked at David in a little confusion,
looked back into the sweet open spaces of the barn. “I may go to
England——” she began.
“Looks like you might be surprising us, too, one of these days!” Etta
said, shrewd and curious.
David glanced quickly at the girl; she was walking beside Etta.
“You wouldn’t want me to be an old maid, Etta?” she asked, once
more with that new, poised manner.
“No, ma’am!” Etta said, positively. “We certainly need some new life
about the place. I’s saying to John a few days ago I hope both the
girls’d get married.”
“Well,” Gabrielle said, with a somewhat dreamy expression in her
blue eyes, “then let’s hope we will.” And David, although she
immediately changed the subject by speaking of the kitchen yard of
the new house, was certain that he saw the colour creep up under
her clear skin, and the hint of a mysterious smile.
“Don’t shock us with too many surprises in one morning, Gabrielle,”
he warned her, trying to smile naturally.
“Ah, no, I shall save something and let things appear by degrees!”
she answered, cheerfully. “Brick wall here, David?”
“Brick wall here, joining the stable wall in a long line, with the poplars
back of it,” he agreed, with a suddenly cold, heavy heart. “Jim has
managed to save the poplars, you see. And all the kitchen matters
will be reached through a little round-topped gate in the wall about
here.”
“And the dining-room windows looking out here where all the lilacs
are?”
“With a sort of portico—an open court, tiled, here on the north front—
where it will be cool in the afternoons.”
“David, it’s so much more wonderful than I dreamed it would be!
Imagine a new Wastewater, all sunshine and happiness, instead of
that terrible old barrack full of jealousy and secrets and plots! Isn’t it
like a fairy tale? To think that life can be so sweet——”
“Gay, there’s no sweetness that you don’t deserve,” David said,
suddenly, as they followed the others. “After that defrauded
childhood, and all the shocks and sorrows you had when you first
came home two years ago, nothing could be too much!”
“I feel now,” the girl answered, seriously, “as if, on that last night of
fire and horror and bewilderment, the whole dreadful thing had been
burned out—cauterized, made clean once and for all, and that now
we start with a new order!”
“I don’t know as there’s a prettier place anywhere than Browns’,”
said Etta’s mildly complaining voice. “If she has one window she has
a hundred——”
“Etta!” Gabrielle said, briskly, paying no attention, “have you some
chops? Mr. David and I are going to have our lunch down on the
shore. And will you make us some coffee, Etta, and give us matches
and butter and all the rest of it? It’s half-past eleven now, and we’ll
want to start about one.—Now, show me everything, David, and tell
me ten thousand things about everything!”
“John, have you those blue-prints?” David, out of whose sky the sun
had dropped leaving everything dark and gray, asked the foreman.
“The plans for the house that looks sorter slumped down, with the
roof two stories deep?” John asked, as one anxious to coöperate
intelligently.
“Certainly! The only ones we have,” David answered, impatiently.
Gabrielle bent suddenly down over the dog, but when she and David
were strolling away through the perfumed warmth and the sweet
young green of the garden, she asked, with her old wide-eyed,
delighted smile:
“John and Etta don’t approve of Mr. Rucker’s plans?”
But David’s heart was too sick for laughter.
“You really may be following Sylvia’s example one of these days,
Gabrielle?”
Instantly the clear warm skin was flooded with colour and an oddly
troubled look came into her beautiful eyes.
“Well, I suppose so——”
David spoke smilingly, but with rather a dry mouth.
“You got over—you forgot—the man of whom you told me more than
two years ago?”
“No,” she answered, briefly.
“You mean that you have seen him again?”
“Oh, yes!”
“Ah,” David said, blindly trying to say something that should avert her
too-close scrutiny, “I see.”
He felt his heart leaden. It was with sort of physical difficulty that he
guided her through the new Wastewater that was yet in so many
ways the old.
So much was his anyway, he told himself. This day of her dear
companionship, this luncheon on the rocks, this monopoly of her
husky and wonderful voice, her earnest, quick glances, her laughter,
were his for a little while. Even over the utter desolation of his spirit,
he was won to an exquisite and yet agonizing happiness by this
nearness of all her sweetness and charm again.
First, she must see the plans. They sat down upon a pile of clear
lumber in the trembling green shade of overhanging maple
branches, and pegged the fluttering blue sheets with bits of rock, and
bent over them.
And now, as she eagerly identified the placing of casement windows
and bricked terraces, she was so close that David got the actual
flowery fragrance of her, and her warm, satin-smooth hand
occasionally touched his. She had laid aside her big coat, and
looked a little less impressive in the plain little suit and delicate white
frills, and somehow all the more her own wonderful self, the eager,
busy, interested little Gay of years ago.
“David, see here, dear——” She added the little word so
unconsciously, he thought, with a pang! “See here, dear, these two
rooms upstairs will be almost empty—this with a north light, in case
my smart cousin should want to do some painting.”
“Do you mean that you and Tom and Sylvia really plan to make your
home here?” David asked.
“As for Tom, I can’t say—he and Sylvia will surely spend their
summers here. But this will always be home, headquarters, for me,”
Gay said. And she laid her beautiful hand upon the blue-prints
almost with a caress. “My little house!” she said, lovingly, “with its
chimney seats and casement windows—and we must have roses
and hollyhocks jammed up against them in summer, and with its
darling white woodwork and pink and blue papers, and with its little
breakfast room looking over the sea——”
“Not so little,” David warned her, “you will have a dozen rooms, you
know, besides the servants’ quarters in that high roof that John
dislikes so heartily.”
“Little beside all those high brick walls and wings and windows of the
old Wastewater,” she countered. “Poor unhappy Wastewater!” she
said more than once, as they walked slowly about, in the increasing
warmth of the day. “Sic semper tyrannis!” And she touched the
neatly ranked bricks with a gentle hand. “We could build ten houses,
couldn’t we?”
“You will have enough bricks there to do everything you ever want to
—walls, bath-houses, paths, new buildings,” David assured her.
Gabrielle had picked a plume of purple lilac; she slowly twirled it and
sniffed it as they walked. The late morning was so still that they
could hear an occasional distant cock-crow. Silence, fragrance, and
the sweetness of expanding life lay upon the world like a spell.
“Do you see that angle of land there,” the girl asked, presently, when
with their lunch basket they were going toward the shore, “there, just
beyond the spit, with its own little curve of bay? That never seemed
quite to belong to the rest of the place.”
“You could sell it,” David suggested, catching her firm hand in his as
she cautiously followed him down the rocky path.
“Oh, no! I don’t mean that. But you see what a cunning little
homestead it would make all by itself,” Gabrielle said, making her
way to their old favourite spot and beginning the preparations for a
little driftwood fire. “It has good trees, and that line of silver birches,
and it has dogwoods. I was wondering if Tom and Sylvia wouldn’t like
a house there all their own—no responsibility, a place they could
shut up and leave when they wanted to wander.”
“Then they are not going to live with her,” David thought, with his
heart sinking again.
She had been talking about them in a desultory fashion all morning,
but when the coffee was boiling, and the buns toasted, and the
chops dripping and sizzling, she settled herself back comfortably
against the rocks, and gave him the story consecutively.
“Sylvia is a changed person in lots of ways,” said Gay, with relish.
“And in other ways she is exactly what she always was and always
will be. She has the—you take cream, David?—she has the family
pride. Only it takes a rather nice form with her, the form of self-
respect. Sylvia must—she simply must respect herself. And after
poor Aunt Flora died, what with having lost her fortune and then
having to bear what she considered—and what really was!—a
terrible blow to her pride, poor Sylvia really suffered terribly. She kept
trying to analyse how she felt, and convince me about it, and I know
that’s what made her ill. She couldn’t quite get used to not being—
what shall I call it?—admirable, superb, superior—that was always
my old word for her.
“She talked about college courses, and I think she must have written
the Dean about it, but perhaps she wasn’t much encouraged. After
all, Sylvia’s only twenty-two, and perhaps professors have to be a
little older.
“So we drifted down to southern California, Sylvia in mourning, of
course, and not taking any interest in anything, and Tom worse. But
when we got to La Crescenta suddenly we all felt better. Tom began
to eat and sleep; Sylvia and I took long walks; we even went in to
Los Angeles to concerts.
“And in no time she found that she could still be—superior, with Tom.
He began to admire her tremendously—he thought she knew
everything! But never in my life have I seen Sylvia so—well, so
gentle with anybody as she was with Tom! She began to make much
of what he knew—regularly draw him out; he speaks very good
Spanish you know, and you can use Spanish a good deal there.
Sylvia talked to him about boats, navigation, places he had been and
we hadn’t, and all the time”—and Gabrielle’s eyes danced—“all the
time it was just as if she was afraid of breaking the spell she had put
on herself—if you know what I mean, David?”
“I think I do.”
“Meanwhile,” the girl resumed, with keen enjoyment, “Tom was
changing, too. He’s gotten—finer, in a funny sort of way. His voice
has grown finer, and he—he just stares at Sylvia whatever she does,
and smiles at whatever she says, and he is like a lion on a string!”
Her joyous laugh was infectious, and David laughed in spite of
himself.
“About—this is April. About Christmas time,” Gay resumed, “I began
to notice it. Tom was funny and humble and quiet with Sylvia, and
Sylvia was bent upon making much of Tom; she’d quote him—I don’t
know whether I can convey this to you—but she’d say to me so
seriously, ‘Tom says the rain isn’t over. Tom doesn’t like Doctor
Madison; he thinks his manner with us is a little too assured’, that
sort of thing,” Gabrielle explained, frowning faintly despite her smile,
in her eagerness to make him understand her.
“Well, we went to San Francisco, and there I really did have the best
time I ever had in my life!” Gabrielle said. “The Montallen girls were
there, with their brother, and we had some wonderful parties—we
went through Chinatown, and out to the beach, and up the mountain,
and everywhere. And I suppose I hadn’t been noticing Sylvia very
closely, because, after the Montallens left——”
“Oh, they left, did they?” David, interested in the brother, asked.
“Yes, they came straight home. It’s the Montallens,” Gabrielle said,
parenthetically, “that want me to go abroad with them in June.”
“I see. Will the brother go?”
“Oh, I think so.”
“I see. But go on—about Sylvia.”
“Well, when they left Sylvia suddenly seemed so odd. She cried a
good deal, and she was quite cranky—not a bit like herself. By this
time we were all getting ready for the Panama trip. Margret thought
that perhaps it was young Bart Montallen, who is a perfectly stunning
fellow—in diplomacy——” Gabrielle elaborated.
“I remember him,” David said, briefly.
“But one day Sylvia broke down and cried for an hour,” Gabrielle
said. “It was the day before we sailed, and we were at the Fairmont.
It almost drove me wild—it had been a real responsibility, anyway,”
the girl interrupted herself to remind him. “When we left here I was
worried sick about Tom, we were all blue and dazed—and really I’d
had it all on my mind until I got a little nervous.
“I coaxed Sylvia and petted her, and finally she told me that he had
asked her to marry him—and there I made my first mistake,” Gay
added, widening her eyes so innocently at David that he laughed
aloud. “I said—trying to be sympathetic, you know—‘And of course,
you wouldn’t!’ and she got rather red and looked straight at me and
said, ‘Why shouldn’t I?’ I said, rather feebly, ‘Well, I didn’t know you
cared about him,’ and she said, ‘I don’t. But I consider him in every
way one of the finest men I ever knew!’ Of course I said I did, too.
“Then she began to cry again, and said that she was entirely alone in
the world—all that,” Gay resumed, “and she said that any woman
would be proud to marry Tom, but that she was afraid everyone
would think she was influenced by the thought of his money.”
“And what did you say to that?” David asked, diverted.
Gabrielle gave him her gravely wise look, and the beautiful face,
flushed with the warmth of the day and shaded by the blue hat, was
so near that David lost the thread of her words for a few seconds, in
sheer marvelling at her beauty.
“I said I did not think that that should be a consideration,” she
answered. “I said that no one had thought that of you, when you
were engaged to her,” she added, after a moment, and with a
sudden smile.
David, who was leaning back against a rock and had his arms
folded, flushed a little in his turn.
“I don’t think that was ever, really, an engagement,” he offered.
And remembering suddenly that he had terminated what had been a
rather definite understanding with Sylvia, simply that he might offer
Gabrielle his name and his protection, he had an instant of being
hardly able to believe himself the same man.
“So then we all left the next morning. That was fun!” the girl went on.
“The ship was delightful, and nobody was sick, and it was a January
day as warm and green as June—and Tom was just wild with high
spirits; I never saw him so gay! And well he might be, for he and
Sylvia had been married that morning.
“Sylvia, on the other hand, acted very queerly; cried a good deal—
stuck close to me and seemed cross. Once when I asked her if it
was Tom that was worrying her, she said savagely ‘No,’ that she
wished she had never seen Tom Fleming, and that he had wrecked
her happiness for life. And she went back to Aunt Flora’s old talk,”
Gabrielle added, seriously, “about the curse on the Flemings, and all
that.
“She would hardly speak to Tom—and I can tell you, David,” the girl
interrupted herself again to say, “I didn’t anticipate a particularly
pleasant trip to Panama. Tom seemed queer, too, and Margret told
me that she thought the whole thing was a mistake.
“I remembered afterward that Sylvia talked a good deal about the
annulment of marriages on those first few days. She kept telling me
that for a woman an annulment had no value, because any
‘honourable’ woman would feel herself just as much bound after it as
before, but it would at least set the man free. That was two days
after we sailed, and it was that very night that I was playing cribbage
with the old captain—who was a perfect old Scottish darling!—and
afterward went up on the bridge with him. And when I was slipping
down to my room, knowing that Margret would be out of her senses
with anxiety, and Sylvia hunting for me perhaps, I passed a man and
a woman at the rail.
“It was midnight, and there was no moon, but as I went by I heard
the man’s voice, and it was Tom’s. And then I saw that the woman
was Sylvia, and that she was crying. Tom was sort of growling—you
know how he talks when he is a little angry and a little ill at ease—
and I heard Sylvia say the word ‘annulment.’ ‘I can’t stand it, Tom, it
was all a silly mistake!’ she said. ‘You can’t talk like that, Sylvia,’ Tom
said, in a sort of shocked voice.
“Suddenly the whole thing came to me,” Gabrielle said, with all a
child’s wondering, delighted stare fixed upon David, “and I went
straight up to them and put my arm about them from behind and
said, ‘Tell me about it, I know you’re married!’
“Of course, I was delighted—much more so than you can believe—I
didn’t have to pretend that! Because I had had a sort of fear that
once they both got back to their natural surroundings Sylvia would
get proud and collegy—you know what I mean?—again,” the girl
went on, “and that Tom would begin to feel awkward and nothing
would come of their affair. So I made a great fuss—cried, really, I
was so excited! And just then Margret came along the deck, afraid
I’d gone overboard or something, and we told her—and she laughed
and cried. And Sylvia began to seem more normal, especially when
we went to our cabin, and I said what a dear old fellow Tom was, and
how he adored her. She began to smile—the way she does, you
know, when she really doesn’t want to smile—and began to talk
pityingly about a very pretty English girl on board who had taken an
immense fancy to him.
“Well, after that,” and Gay’s laugh was delicious to hear, “you should
have seen Sylvia! She—glowed! I never saw her so handsome, and
so happy, and so—well, you know her!—so superb. She was all the
proud wife. Everything Tom did was mysteriously perfect, and
everything he said she listened to with as much attention as if it were
his dying words. She quoted him, she fenced herself off with him
with rugs and deck chairs and books, and read to him; they walked
round and round the deck together.
“It seems as if Sylvia must be a little superior on some count or other
to be happy!” Gay commented, affectionately and amusedly. “Now
she’s infinitely happy. She is Mrs. Tom Fleming, and she has a
handsome, rich husband who adores her, and presently they’ll have
the most superior children—and believe me,” the girl finished,
laughing, “Sylvia will feel that just what those children do is the
astonishing thing; if any other child is taller, she’ll say it is weedy and
has outgrown its strength, and if any child is smarter she’ll say it is
unpleasantly precocious!”
“So you got to Panama——?” David prompted after a silence
devoted to smiling musing, and the warmth and sweetness of the
day, and the delicate silver whisper of the sea among the rocks.
“So we got to Panama, and by this time Mr. and Mrs. Tom Fleming
only wanted to be left alone,” Gay resumed, raising her blue eyes to
smile at him. “So there were great debates. They didn’t want to wire
you, because such a wire is very apt to be noticed, and they didn’t
quite want to come home; in fact, they planned this Southern trip as
a sort of supplementary honeymoon. So, as there was a charming
navy woman, a Mrs. Stephens, coming all the way up, I was
delighted to put myself and Margret in her care. And that’s all.”
She had packed the remains of their meal into the little basket in the
old quick, capable way that David so well remembered, and now she
descended to a certain little pool among the rocks, and washed her
hands, pushing the frills of her cuffs back from her slender wrists as
she did so, and waving her hands in the air to dry them.
“You’ve told me everything—except your own affair, Gabrielle,” David
presently prompted, when they were making their way up the cliff
path to the garden.
“My—my own affair?” Perhaps she had not understood, for although
she turned scarlet suddenly, she made no further admission.
“There is—somebody, you told me once?” David prompted her.
“Oh, yes!” She dismissed it with a shrug. “That,” she said, with a
thoughtful note in her voice.
She added no more at the time. The enchanted hours of the day
moved to three o’clock. But when David, knowing her to be tired from
the long trip and probably confused with all the changes and
impressions, suggested their return to Keyport, she showed a
reluctance as definite as his own.
She had given him, on this spring day of lingering lights and soft
fragrance, such a revelation of her own sweetness, her own
personality, as made all his other recollections of her seem pale and
dim. Every turn of her head, every movement, every direct look from
her star-sapphire eyes, had deepened the old impression that there
was nobody quite like her in the world.
Nobody so gracious, so quietly joyous, nobody else at once so
youthful and so wise. A hundred times, by some quality of being
simply and eagerly happy just in the springtime, and the garden, and
his company, she reminded him of the long-ago little girl Gabrielle,
and yet, at twenty, David thought her already a woman.
They talked of the old Wastewater, as they planned and went to and
fro busied with problems of the proportions and the placing of the
new. Of the family, with its passions and hates, its jealousies and
weaknesses.
“The new house,” Gabrielle said, whimsically, “will stand as much for
the new order as the old one did for the stupidities and affectations
of the old. It’s all to be simple, no affectations, no great big gloomy
basement regions for the servants—they’ll have their section as
comfortable, as sunshiny as the other. There’ll be open fires instead
of the old hideous grates, and rugs and clean floors instead of the
old dirty, hard-and-fast carpets, and bathrooms full of tiles and
sunshine, and sleeping porches instead of all that horrible rep
curtaining—and there’ll be——”
Her voice lowered. “There’ll be people loving each other,” she said.
“After all, isn’t that the answer to the whole problem? Women being
loyal and generous, instead of jealous and watching all the time,
men thinking of other people’s happiness, instead of having
themselves painted in picturesque attitudes.”
She finished laughing, but her face was presently serious again.
They were idly wandering through the ruins of the garden now,
Gabrielle a little flushed and tumbled from the efforts of raising a
bent rose bush, or straightening, with a little air of anxiety and
concentration that David thought somehow touchingly mother-like, a
sheaf of timidly budded whips that would some day be sweet with
white syringa bloom.
She stopped at the old sundial and cleared the fallen packed damp
leaves from its face with a stick, and busied herself so earnestly
about it that David thought her more like an adorable child, and more
like a responsible little housewife, than ever. He thought of the wife
she would make some man some day, and felt suddenly that he
must get away—out of the country—anywhere!—before that time
came.
“You can’t tell me your plans yet, Gabrielle dear?” he said, with a
rather dry throat, when they were beside the dial.
The girl’s colour deepened a little under the creamy skin, and for a
moment she did not answer. Then she said with a look straight into
his eyes:
“I could tell you—as far as they have gone.”
“Not unless you want to,” David answered, from the other side of the
dial, which he gripped with fingers that were suddenly shaking.
“The man of whom I spoke to you, so long ago,” Gabrielle said,
presently, “I saw again—this spring.”
“I see,” David said, with a nod, as she paused. “He did not marry the
other woman, then?”
“What other woman?” the girl demanded, amazed.
“I thought you said that he had cared for another woman?”
“Ah——? Ah, yes, so he had. No, he didn’t marry her. He is—quite
free,” said Gabrielle, working busily.
“You’re very sure you care for him, dear?” David said, already
relegated, in his own mind, to the sphere of the advisory, loving older
brother.
“Yes,” she said, with another upraised look. “I am sure. I have never
felt for anybody else what I do for him, and I know now I never shall.
When I first saw him—more than two years ago——”
“You saw him first then?”
“Well, I had seen him as a child. But after I got home from Paris I
saw him again,” the girl offered, lucidly.
“I see.” She was so radiant, she was so wonderful! If he should be
some utter good-for-naught, David thought——
“Then I did not see him, except occasionally,” Gabrielle resumed.
“And when I did not see him, then I knew that logically, actually, he
was everything I could love; a gentleman, kind, wise, admirable in
every way.”
“Rich?” David asked, in a silence, and with a faint frown.
“No. Not—exactly poor, either.”
“But does he know that you are rich, Gabrielle?”
“I don’t think it makes any difference to him,” the girl said,
thoughtfully, after a moment.
“I don’t suppose, of course, that it would!” David agreed,
immediately.
“No. So that when I was away from him, I had time to think it out
logically and dispassionately, and I knew he was—the one,” the girl
resumed, “and when I saw him—whenever we were together,
although I couldn’t think logically, or indeed think at all,” she said,
laughing, and flushed, and meeting his eyes with a sort of defiant
courage, “I knew, from the way I felt, that there never could be, and
never would be, any one else!”
“I see, of course,” David said, slowly.
“Both ways,” Gabrielle went on, smiling a little anxiously, “I feel safe.
When I’m not with him I can reason about it, I can look forward to all
the years, thinking of myself as older, as the mother of children,” the
girl went on seriously, her voice lowered to the essence of itself, her
eyes upon the softly heaving and shining sea, “thinking of the books,
the tramps, the friendships we will share. There is no moment of life
that he will not make wonderful to me, poverty, change, sorrow,
travel—everything,” she finished, looking up smiling, yet with the
glitter of tears in her beautiful eyes.
“I——” David cleared his throat—“I am so glad you can tell me, Gay,”
he said, a little gruffly.
“I love to tell you!” the girl said, with an illuminated look.
“It—is settled, Gabrielle?”
“No. Not exactly. That is——” She coloured violently, laughed, and
grew suddenly pale. “No, it’s not settled,” she answered, confusedly.
“You can’t tell me anything more?” David asked, after a pause.
“Not—now, very well. At least, I think I can soon,” Gay said, laughing
and flushed, yet oddly near, he could see, to tears, too. “I know that
he—cares for me,” she added, after another brief silence.
“He has told you?”
“Well, no. Or yes, he has, too—in a way. But all that——” she broke
off, appealingly.
“Yes, I know,” David reassured her. “You shall tell me when you’re
ready.”
“David, I suppose we should be going back,” the girl said, reluctantly.
But she did not change her comfortable position, resting against the
dial, and looking alternately at its blackened old stone surface and
across the shining sea.
“Presently. I hate to end—to-day,” David answered, simply.
“So do I. Hasn’t it been a wonderful day? Doesn’t it seem like the
beginning of heavenly times?”
“One of the happiest of my life,” David said, trying to lighten the
words with his old friendly smile, and failing.
Gabrielle was silent, and in the stillness all the sweet sounds of a
spring afternoon made themselves heard: the lisp of the sea, the
chirp of little birds flying low in short curving flights among the
budding shrubs, a banging door in the farmhouse and the distant
sound of voices as the workmen put up their tools and started their
motor engines.
The sun was sending long slanting rays down across the torn earth,
and the old garden, and the piled bricks. John’s and Etta’s house,
joined by the simple curve of the arch to the long, low roofs of the
barn, looked everything that was homelike and comfortable in the
sinking glow.
“I see summer suppers here, in the court,” Gabrielle said, presently,
in a low voice, as if half to herself. “Guest rooms all fresh and airy,
Sylvia’s children, and my children, drawing others here for picnics on
the shore, white dresses, and the harvest moon coming up there
across the sea, as we have seen it rise so many hundreds of times! I
don’t know which will be most wonderful, David: the long summers

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Taxation Finance Act 2022 (28th

Edition) - eBook PDF

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Preface ix Eligible interest payments 55

12 Income from self-employment: Part 2 Capital Gains Tax

Chargeable disposals 261 Part 3 Corporation Tax

Choice of loss relief 411 The tax point 474

Starting rate for savings 0% 0%

SCOTTISH TAX RATES AND BANDS†

CAR AND FUEL BENEFIT

National Insurance Contributions

Capital Gains Tax

Value Added Tax

INCOME TAX AND

Sources of tax law

European Union law

Statements made by the tax authorities

The tax year

Structure of HM Revenue and Customs

Administration of the tax system

Notification of chargeability to tax

General anti-abuse rule (GAAR)

Making Tax Digital (MTD) for income tax

The HMRC Charter

Multiple choice questions

Child's income derived from parent

Exempt organisations and individuals

Structure of an income tax computation

Married couples and civil partners

Rates of income tax for 2022-23

Income taxed at source

Personal savings allowance

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